Over 75 Tril. Won to Be Injected into Cash-strapped Companies
As job markets are worsening amid weak manufacturing and social distancing, the South Korean government has come up with a plan to provide further support to help businesses retain jobs.
The plan, which was approved at the 5th Emergency Economic Council Meeting on April 22, contains 1) wage subsidies for small businesses and enterprises, and programs for the unemployed, and 2) liquidity injection for cash-strapped companies.
The government has set aside 10.1 trillion won for wage subsidies and programs for the unemployed. It will benefit 2.86 million persons. The plan includes:
- Wage subsidies for small businesses and enterprises: 0.9 trillion won for 520,000 employees
- Emergency relief for those outside the unemployment insurance: 1.9 trillion won for 1,130,000 unemployed
- Create jobs for low income groups and young adults: 3.6 trillion won for 550,000 job seekers
- Job seeker benefits and job training programs: 3.7 trillion won for 660,000 job seekers
Out of the 10.1 trillion won, 0.8 trillion won will be spent immediately using government funds, and the rest 9.3 trillion won will have to get an approval from the National Assembly.
The government will also raise over 75 trillion won to inject liquidity into cash-strapped companies. The liquidity support will be added to the over 100 trillion won package announced at the 2nd emergency economic council meeting held on March 25. The new package includes:
- A total of 35 trillion won to be added to the support for businesses hit hard: Support for small businesses and enterprises (up 10 trillion won), purchases of low-rated corporate bonds, CPs and short-term corporate debt (up 20 trillion won), and P-CBO support (up 5 trillion won)
- A total of 40 trillion won for cash-strapped key industries
To finance the support, the government will submit to the National Assembly revisions to the Korea Development Bank Act by April 24 and the agreement on government guarantee of fund bonds by April 28.