56th meeting of central economic response headquarters
Government to Support Companies Affected
and Respond to Supply Shortage
Deputy Prime Minister Hong Nam-ki presided over the 56th Meeting of the Central Economic Response Headquarters held on March 16. The following is a summary of DPM Hong’s opening statement.
February 2022 Employment Statistics
In February 2022, the number of employed persons went up over 1.03 million compared to the same period last year and 417,000 compared to a month before. The employment between ages 15-64 rated 67.4 percent recording the highest while the unemployment rate reached 3.4 percent, recording the lowest ever for the month of February.
Moreover, the employment situation improved considering the number of real employed persons reflecting the population decrease in ages 30-40s has increased by more or less 100,000. The number of employers showed growth for three consecutive months with 39,000 added in February and the number of full-time employees increased by 973,000.
The government will continue to work with special attention to the difficulties in terms of employment for those hit by the pandemic and vulnerable groups and the possibility of the global economic uncertainties affecting the employment situation.
Economic Trend and Response to Ukraine Conflicts
The biggest risk factor surrounding the Korean economy is the growing uncertainties and volatility of the global economy due to Russia’s invasion of Ukraine and the extension of international sanctions against Russia.
In March, declining exports to Russia and Ukraine as well as the upward pressure on price due to rising oil prices indicate some shocks in the real economy, raising concerns over the level of impact if the situation continues.
In particular, there have been logistics disruptions and delays or cancellations of payment among the companies working with Russia and Ukraine as well as difficulties in bank transfer for students and expatriates. Therefore, we will review the situation at the meeting and discuss additional response measures.
Support for companies affected
The government will first provide 2 trillion won in emergency financial support, 0.2 trillion won in SME financial stabilization fund, and a special guarantee, and expand the scale and scope of support if necessary.
For the export and logistics voucher support, the government will include up to 20 million won per company for the transportation and late fees in case they have to return to Korea or travel to alternative destinations.
In order to find alternative trade options for companies affected, the government will hold a customized emergency consultation on March 31 and operate a team dedicated to work on connecting the affected companies with overseas buyers.
Resolving difficulties in payment and remittance
The Financial Supervisory Service will operate an emergency financial consulting center at all times and update and provide information on tradable items and the range of transactions and remittances possible.
Those transferring money to students and residents in Russia are encouraged to use corporate bank accounts maintained by Korean banks operating in Russia or the quick overseas remittance system run by the Ministry of Foreign Affairs.
Supply chain management
In case of growing concerns over energy supply disruptions, additional supply will be secured immediately such as the crude oil produced overseas by the Korea National Oil Corporation.
In April, the government will apply a zero percent quota tariff to neon, xenon, and Krypton from the current 5.5 percent for which Korea relies heavily on imports from Russia and Ukraine, and increase the quota for barley, a substitute for corn feed to 250,000 tons.
In addition, the government will also stabilize the supply of corn by preparing substitutes for the 69,000 tons from Ukraine. It will also release 11,595 tons of pollack from the stockpile in case of a supply shortage.
Stabilization of foreign exchange market
To preemptively prepare for the potential shortage of foreign currency liquidity, the government will retain relaxed rules on banks’ foreign exchange forward positions until the second quarter, and announce in March an extension decision of lowering the foreign exchange liquidity coverage ratio to 70 percent.
As for the FX market, the government will consider the economic fundamentals and monetary movements in other countries, and strengthen efforts to stabilize the market if the rising pace is deemed excessive.
Industry Specific Support Measures
The government has designated 15 special industries that have been suffering from employment insecurity and worsening business conditions including the travel and tourism industries to actively support employment stability, and the designation period will expire at the end of March, excluding the shipbuilding industry which has been extended to December 31, 2022.
The employment situation and retail sales in 2021 improved compared to the year before but there is demand from the industries that support is needed until the industries are fully recovered. We will discuss at the meeting whether to extend the designation period for the 14 industries, and to newly designate the taxi industry.
Please refer to the attached pdf