SOUTH KOREA: Seongnam City announced to implement ‘Youth Dividend’

by Toru Yamamori | Oct 7, 2015 | News

Jaemyoung Lee, Mayor of Seongnam City, announced to implement Youth Dividend at a press conference on the first day of October 2015. He informed the purpose, goal and way of Youth Dividend, and proposed that the national government should implement it as well.

Every person aged 19-24 who has lived at the city at least for three years will receive kw 250,000 (about $ 230) quarterly (total kw 1,000,000 a year) without any means-test or work requirement. In this sense, Youth Dividend aims to realize the basic income idea which is different to the previous selected welfare policy, although its amount is very small.

This scheme will be implemented year by year from 24s, because the city has not sufficient fund. According to the statistics, there are about 70,000 aged 19-24 having lived at least for three years and among them 24s are 11,300. So more than kw 60 bn budget will be required to pay kw 1,000,000 to everyone aged 19-24. The city has a plan to carry it out optimizing the budget.

Youth Dividend has two fold goals. It has aims to “expand the welfare for the young people so that they could have more opportunities for raising their qualification” and to “stimulate the local economy by the way of paying Youth Dividend in electronic money which could be only used within the city.”

This scheme has another effect as well. Criticizing President Park’s ‘Hopeful Fund for the Youth’ which is regarded as a philanthropic disguise, Mayor Lee proposed “the central government should adapt Youth Dividend to resolve the so called youth problem fundamentally.”

Korean government pushes ahead with Hopeful Fund for the Youth to conduct practical education for the young people who want to get a job or run their own business through the citizen’s donation. Mayor Lee sharply criticized it, because it gives up the responsibility of government. “The youth problem cannot be resolved by the philanthropic donation”, he said. And “the central government has responsibility to take care of it for the continuous development of the society.”

Two issues, the limitation of regional government budget and the tax justice, are behind his claim that the national government should take Youth Dividend as its program. Mayor Lee said “we should assure the money on the ground of strict tax justice” for resolving the youth problem. For example, if we raise the current rate of 22 percent of corporate tax to 25 percent, we could have a considerable amount of money. Indeed, Korean government has lowered the rate of corporate tax in past years.

There need to pass through another two processes to implement actually Youth Dividend. On the one hand, Seongnam City has to make “an arrangement” with the Ministry of Health and Welfare and on the other hand, the statute of Youth Dividend should be passed in the city council. Seongnam City applied an arrangement with the Ministry on the 24^th September and made pre-announcement of legislation of ‘Youth Dividend Statute’ on the 29^th.

The reason that Seongnam City has to have an arrangement with Ministry of Health and Welfare is because Article 26 of Social Security Act in Korea regulates the related process. According to it, any regional government which has a plan to make a new social welfare scheme or to change the current programs has to make an arrangement with the Ministry. But the Ministry has de facto power to permit, although the Act contains the expression, “arrangement.” We have lots of cases in which welfare programs in regional government could not be carried out face with the Ministry’s opposition.

So we are afraid of the arrangement process, because current Korean government is so authoritarian and neoliberal. But if the process will be completed as we wish, we have an opportunity to realize the basic income idea here in Korea, even though not sufficient.

[Written by Seonmi Park in Korean and translated by Hyosang Ahn (Both are members of Basic Income Korean Network)]