South Korea outlines budget to create jobs

South Korea's government Tuesday proposed a 2012 budget that would cut the fiscal deficit while boosting jobs and social welfare programmes to ease the impact of global economic uncertainty. The proposal, to be presented to parliament Friday, calls for total spending of 326.1 trillion won ($272.7 billion) next year, a 5.5 percent rise over this year. "It is inevitable to place the top policy priority on job creation to minimise the impact of the global fiscal crisis on the real economy," Finance Minister Bahk Jae-Wan told reporters. "We drew up next year's spending plan as a jobs budget." The government will offer 9.5 trillion won to create 562,000 jobs for younger people, senior citizens and others vulnerable to an economic slowdown. The figure is up from this year's 9 trillion won. It will also launch a 200-billion-won fund intended to help young people start their own businesses. It will spend more on encouraging people to get jobs and provide job training for those in their 40s and 50s. "The 2012 budget puts priority on creating jobs and supporting those who want to work but face difficult situations, by providing customised welfare services," the finance ministry said in a statement. Total income next year is forecast to grow by 9.5 percent to 344.1 trillion won, leaving a fiscal deficit for 2012 equal to 1 percent of gross domestic product compared with 2.0 percent this year. The aim is to balance the budget in 2013. Overall sovereign debt will be cut to 32.8 percent of gross domestic product next year compared with 35.1 percent this year under the budget. Health and welfare spending will rise 6.4 percent next year, education spending will increase 9.3 percent and defence outlays will rise by 5.6 percent if the budget is approved by legislators. The projections assume 4.5 percent growth and 3.0 percent inflation next year. The International Monetary Fund this month cut its growth forecast for this year to 4 percent from 4.5 percent, citing the "unusual uncertainty in the external environment". The finance ministry said the economic recovery trend would remain intact this year, "but uncertainties have increased because of the fiscal crisis among key advanced countries". It said it would endeavour to strengthen the government's fiscal health to give it the ability to respond to any local economic crisis.