Dispute between the central government and Seoul City is escalating over the municipality’s plan to provide allowances for unemployed young people as part of its welfare measures. 

The Seoul Metropolitan Government vowed in October to offer an average of 500,000 won ($425) in monthly support for unemployed youth for up to six months in an aim to better support young job seekers. This is part of the city’s five-year measures for supporting the employment of young people. 

About 3,000 of those aged between 19 and 29 in the low-income bracket will benefit from the scheme starting from next year on a trial basis. They will be selected upon review of their applications, officials said. Seoul City said it would inject about 9 billion won into the program in the first year.

The city emphasized that the new scheme will work as a social safety net and pave a firm path for self-support for job seekers. According to the city, about 35 percent of Seoulites in their 20s, or 502,000, are either part-time employees or unemployed.



Scheme sparks political debate



Seoul City’s announcement, however, immediately sparked debate in the political arena, with the ruling party arguing that the new measure is a “populist” measure with political motives ahead of the general elections slated for next year. Seoul Mayor Park Won-soon is a member of the main opposition New Politics Alliance for Democracy. While Park will serve as mayor until 2017, he holds heavy sway among liberal voters. The NPAD considers cooperation with Park a key strategy to woo voters.

“Although I agree that youth unemployment is a solution-needed issue, ‘purchasing’ the youth’s minds with an allowance is typical populism that is seriously improper,” Saenuri Party chairman Rep. Kim Moo-sung said.

“I warn that the act of buying voters with taxpayers’ money will ultimately return like a boomerang and be judged by residents,” he added.

Kim also blasted a similar project pushed by Seongnam City in Gyeonggi Province led by progressive mayor Lee Jae-myung.

Earlier this year, Seongnam City vowed to offer 1 million won throughout one year for all youth aged between 19 and 24 who have lived in the city over three years in an aim to support the job-hunting process.

Many raised speculations that the ruling party is intentionally criticizing the two city representatives to contain their influence in upcoming elections.

Park has competed for the top ranking with Kim in public opinion polls on potential presidential candidates. Seongnam’s Lee has also recently been added to the list of potential candidates after he drew public attention with a series of welfare project proposals, such as free school uniforms for students and free postpartum care centers for mothers.

Seoul City, however, refuted the “populist” claim. It argues that, for one, the new project is different from Seongnam’s, as the capital would selectively implement the program based on need, while Seongnam will universally support all young job seekers.

Some supporters of the allowance program also assert that a similar welfare benefit scheme was considered by President Park Geun-hye when she led the Grand National Party in 2011. The then-ruling party had contemplated providing 300,000 won subsidies to young job seekers for up to four months.

The central government, however, has warned the capital city that such welfare measures should not be unilaterally pursued by the city and must be discussed with the Welfare Ministry.

Under social security regulations, municipal heads are mandated to consult with the central government over introducing or changing welfare schemes. Seoul City rebukes the notion.

Political tensions escalated last week after the central government revised an ordinance that would pose hurdles to Seoul City’s allowance plan.

Under the new rule, the state would be allowed to cut local subsidies if municipalities unilaterally introduced or changed social security schemes without negotiating with the central government first, the Interior Ministry said.

“While negotiating welfare measures with the central government is mandatory under the ordinance, there was no penalty for not following the rule. To ensure the effectiveness of the social security regulations, (the government) decided to revise the ordinance,” said Interior Minister Chong Jong-sup.

All municipalities receive various subsidies from the state ranging from general and special budgets to real estate subsidies.

This year, about 32 trillion won in subsidies have been distributed to cities nationwide, with the majority in general subsidies. This indicates the cities’ heavy reliance on the state’s financial support. Seoul City, however, does not receive general subsidies due to its financial independence.

The Seoul Metropolitan Government has expressed “deep regrets” over the government’s move, claiming that such a new rule may breach the local subsidy law.

“This is an act that cuts the ‘sprouting’ of grassroots democracy. Local welfare is needed in places the central government is unable to reach,” said Seoul City spokesperson Kim In-cheol.

The city claimed that controlling local welfare measures by linking them to local subsidies breaches the core of the local autonomous government system. Under the local subsidy law, cities should return the state’s financial subsidies only if they excessively spend them by violating regulations.

The NPAD also expressed concerns.

“The ordinance that threatens municipalities with subsidies is apparently unconstitutional and sets back the welfare system,” said NPAD chairman Rep. Moon Jae-in on Dec. 2.

One day later, however, the Ministry of Government Legislation rebutted Moon by analyzing the legality of the controversial subsidy plan.

It concluded that the allowance measure should be discussed with the Welfare Ministry as the idea of the plan is part of the social security concept that universally defines the constitutional ideas of a modern social welfare country.

“As the purpose of the youth allowance scheme is to support the youth’s capacity and social participation, it must be considered as part of social services under the social security basic law.

While the ministry’s interpretation is not law-binding, it can pose a burden to Seoul City, critics said.

Since the interpretation, Seoul City has remained cautious, saying last week that it would independently review the legality of the controversial scheme and that it would take proper steps afterwards.



Public divided over allowance plan



As the political dispute continues over the city’s youth allowance plan, the public has also been split over the measure’s efficacy.

The business sector insists that providing 500,000 won will only waste the people’s money with little positive impact.

“Although some claim that (the authorities) should promote youth employment through the allowance, it is difficult to alleviate the youth unemployment rate by sharing money. Youth unemployment originates from the unfair system and practice of the labor market rather than the youth’s financial hardships,” said Ryu Ki-jung, director of the Korea Employers Federation.

Even if the new scheme encourages young people to proactively look for jobs, it will likely be difficult to properly monitor the overall process, from selection to proceedings, he added.

Youth organizations, on the other hand, sided with the city government’s plan, arguing that it would help those about to give up job-hunting amid the unemployment crisis.

Civic group Youth Community Union stressed that the policy support and social safety net are currently severely insufficient in Korea, leaving youth in a dilemma between staying out of work and choosing unwanted jobs.

“The most wanted social safety net that the youth seeks is that of recruitment. The government should help the youth whose social connection is weakening over job-hunting challenges,” said policy chief Chung Jun-young at YCU.

Some European countries have already run similar programs, he said.

In France, for example, the government introduced an allowance scheme in 2012 for young job seekers aged 18 to 26 upon their participation in job training programs. About 50,000 young people in France are expected to have benefitted from the program by the end of this year.

In order to ensure the efficacy of the welfare measure, however, sufficient step-by-step employment services must be provided, ranging from counseling to job training, Chung added.

By Lee Hyun-jeong (rene@heraldcorp.com)