[Editorial] Necessity of basic disaster income for vulnerable groups

Posted on : 2020-03-10 17:11 KST Modified on : 2020-03-10 17:11 KST
The launch committee of the Basic Income Party gather at a youth center in Seoul on Sept. 8, 2019. (provided by the Basic Income Party)
The launch committee of the Basic Income Party gather at a youth center in Seoul on Sept. 8, 2019. (provided by the Basic Income Party)

A debate over the idea of a “basic disaster income” has been heating up amid the effects of the novel coronavirus. Some are arguing that direct government subsidies should be paid to vulnerable members of the population to secure their income. Hong Kong and Macau have already devised basic income plans along similar lines, with payouts set to begin shortly. Given the disastrous nature of the current outbreak, it’s worth actively considering the limited-time payment of basic income benefits to certain victim groups.

Since being ignited with a proposal by Socar CEO Lee Jae-woong, the basic disaster income idea has been met with a favorable response from different parties, progressive and conservative alike. Similar proposals have been presented by the newly formed Transition Korea Party, the Basic Income Party, and the Our Future party, while United Future Party leader Hwang Kyo-ahn has voiced his support. The Democratic Party has also called for the adoption of a basic disaster income for vulnerable groups within the population. The stage has been set for an urgent debate and examination.

In its original sense, a basic income refers to a subsidy paid to all citizens regardless of income level. This sort of universal plan has been proposed by Gyeonggi Gov. Lee Jae-myung and South Gyeongsang Gov. Kim Kyoung-soo. The idea is that this approach would save on the time and administrative costs associated with identifying support targets, with the support paid to higher-earning segments to be recouped later on through taxes.

It seems plausible on the surface, but there are drawbacks. Not only would it involve a large financial cost, but the lack of a proper delivery system in place suggests it is also unrealistic. The information the state gathers on individual citizens is focused on area of residence, without details such as bank account data. There are also blind spots with homeless persons and people whose place of residence is unknown. Another drawback is the heated debate that is destined to arise in the process of developing plans to raise taxes after the basic income payouts have been made. We could end up with a situation of populist wrangling and widespread political strife. This explains why even the Transition Korea Party, which has made the payment of a universal basic income part of its platform, has only proposed a limited basic income plan when it comes to the coronavirus outbreak.

Under the current conditions, the more realistic and desirable approach would appear to be a “limited plan” in which support can be focused on the most vulnerable segments: small business owners, mom-and-pop operators, irregular workers, and day laborers. It would cost less in budget terms, and it could be implemented quickly, since the existing subsidy payment system could be employed. The government’s supplementary budget plan, which totals around 11.7 trillion won (US$9.82 billion), already includes a budget of 2.6 trillion won (US$2.18 billion) for something along basic income lines -- namely the issuance of vouchers and cash payments to 5.8 million members vulnerable citizens. It may be possible to achieve the same effect as the adoption of a basic disaster income by increasing the amount of budget outlays alongside these lines and broadening the scope of their targets. This would require either increasing the amount of the current supplementary budget or drafting an additional one.

As the basic disaster income debate has unfolded, there have also been calls from the private sector for a large increase in the supplementary budget’s scale. Speaking to reporters on Mar. 9, Korea Chamber of Commerce and Industry Chairman Park Yong-maan stressed that it was an “unprecedented situation with the coronavirus” and argued that a fiscal outlay of around 40 trillion won (US$33.55 billion) would be “necessary to prepare for the eventuality of the economic growth rate dropping by over a percentage point.”

Beyond simply providing relief to vulnerable members of the population, the aim is to avert a vicious cycle for the economy. Not only does it appear unlikely that the coronavirus situation in South Korea will end any time soon, but the situation in the US and Europe is said to be only just getting started. It’s time for financial authorities to show a sense of urgency.

Please direct comments or questions to [english@hani.co.kr]

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