🚨 Public Support Fund: Government Cash Support Policy for Citizens' Living Stability

Today Korean Social News | 2025.06.23

📌 "Why am I in the top 10%?" Citizens complain about selection criteria for public support fund

💬 The government decided to use health insurance premiums as the standard to identify the top 10% income earners when providing different amounts of public recovery support funds based on income levels. However, fairness issues have arisen due to differences in how income is calculated between workplace subscribers and local subscribers to health insurance.

Especially for self-employed workers and freelancers, there is a gap between their actual income and health insurance premium calculation standards, leading to complaints of "unfairness." During past disaster relief fund distributions, similar criteria led to 460,000 appeals, so significant backlash is expected this time as well.

Summary

• Public support funds are cash support provided by the government for citizens experiencing economic difficulties.
• They are divided into universal payment and selective payment methods, with selection criteria mainly using health insurance premiums.
• Ongoing controversies exist about the fairness and effectiveness of payment criteria.

1️⃣ Definition

Public Support Fund means cash support policies provided by the government to help citizens experiencing economic difficulties stabilize their lives. Simply put, it's a system where the country directly gives money to help people with their living expenses.

This is a policy tool to stimulate citizen consumption and boost the economy during economic crises or disaster situations, while protecting the lives of vulnerable groups.

💡 Why is it important?

• Directly supports citizens' livelihoods during economic crises.
• Has the effect of reducing economic recession through increased consumption.
• Serves as a social safety net and helps reduce income inequality.
• Contributes to realizing the country's social responsibility and improving citizen welfare.

2️⃣ Main Types and Features of Public Support Funds

📕 Classification by Payment Method

• Public support funds are classified according to payment methods. The main methods are:

  • Universal payment: A method that pays the same amount to all citizens regardless of income or assets. The first disaster relief fund in 2020 (400,000 won per person) is a representative example.
  • Selective payment: A method that selects payment recipients based on income or asset levels and provides different amounts. This includes paying only to the bottom 70-80% income earners or varying payment amounts by income brackets.
  • Concentrated payment to vulnerable groups: A method that pays only to groups that have suffered significant economic damage, such as low-income families, small business owners, and workers in specific industries.

• Payment forms are also operated in various ways. The main payment forms are:

  • Cash payment: A method of directly depositing cash into bank accounts, offering high freedom as there are no restrictions on where it can be used.
  • Local love gift certificates: Gift certificates that can only be used in specific regions, which can enhance local economic revitalization effects.
  • Onnuri gift certificates: Gift certificates that can only be used at traditional markets and small business stores, with significant effects supporting small business owners.
  • Card points: A method of accumulating points on existing cards, allowing automatic discounts when using credit or debit cards.

📕 Selection Criteria and Controversies

• Various criteria are used for selective payments. The main criteria are:

  • Health insurance premium criteria: The most commonly used standard, determining income levels through health insurance premium payments. It enables quick payments by utilizing existing administrative data.
  • Comprehensive income tax reporting criteria: Determining payment eligibility based on actual income identified through previous year's comprehensive income tax reports.
  • Property tax criteria: A standard that considers asset levels through property tax payments on owned real estate.
  • Combined criteria: A method that comprehensively considers income, assets, number of household members, etc., to select payment recipients.

• Ongoing controversies exist regarding selection criteria. The main controversial issues are:

  • Gap between health insurance premiums and actual income: For self-employed workers and freelancers, cases occur where they are excluded from support despite reduced actual income because health insurance premium calculation standards reflect past income.
  • Fairness between workplace and local subscribers: Unfairness issues arise because health insurance premium calculation methods differ between workplace and local subscribers even with the same income.
  • Limitations in income identification: Problems occur where truly struggling groups are excluded because cash income or irregular worker income is not accurately identified.
  • Ambiguity in dependent family criteria: When paying per household, confusion arises due to unclear standards for the scope of dependents and income combination methods.

Major Issues with Public Support Funds

1. Financial burden: Concerns about increased national debt due to enormous costs when paying to all citizens
2. Moral hazard: Possibility that continuous support fund payments may cause decreased work motivation or dependency
3. Fairness of selection: Difficulty in setting perfect criteria to distinguish truly needy people
4. Administrative costs: High administrative costs for selecting recipients and processing appeals during selective payments
5. Economic stimulus effect: Questions about whether support funds actually lead to consumption and achieve economic revitalization effects

3️⃣ History and Major Cases of Public Support Funds

✅ Development Process of Domestic Public Support Funds

• Similar policies existed even before COVID-19. The main history includes:

  • During the 2008 global financial crisis, the Lee Myung-bak government supported low-income families with living stability funds as part of the 'Green Growth Foundation Construction Project.'
  • During the 2014 MERS outbreak, limited support was provided to small business owners and the tourism industry in affected areas.
  • At the local government level, various forms of cash support policies such as childbirth incentives and youth allowances have been implemented.

• Full-scale support for all citizens began with COVID-19. The main progress includes:

  • May 2020 First Disaster Relief Fund: 1 million won was paid to all citizens based on a family of four. It was the largest scale in history at 14.3 trillion won total.
  • 2021 Second to Fifth Disaster Relief Funds: Switched to selective payment method, targeting the bottom 70-80% income earners.
  • 2022 Win-Win Consumption Support Fund: Paid to the bottom 70% income earners in the form of local love gift certificates.
  • 2023 Public Recovery Support Fund: Introduced a method of differential payments with more detailed income criteria.

✅ International Cases and Implications

• Major developed countries also implemented similar policies. International cases include:

  • United States: Provided Economic Impact Payments of up to $1,400 per adult three times. Adopted a differential payment method based on income.
  • Japan: Paid 100,000 yen (about 1.1 million won) per person to all citizens as Special Fixed Payments. Used both online and mail application methods.
  • Germany: Designed policies centered on emergency support for self-employed workers and small businesses. Focused on business support rather than individuals.
  • Canada: Provided monthly $2,000 to individuals who lost income due to COVID-19 through the Canada Emergency Response Benefit (CERB).

• Lessons can be learned from international cases. The main lessons are:

  • Utilizing existing administrative systems and databases is important for quick payments.
  • Policy design considering the pros and cons of both universal and selective payments is necessary.
  • To increase the economic effects of support funds, they should be linked with consumption promotion measures.
  • Systematic system construction is needed to prevent fraudulent receipts and process appeals.
  • It's preferable to link with sustainable social safety net construction rather than one-time support.

4️⃣ Related Term Explanations

🔎 Disaster Relief Fund

• Disaster relief funds are government support payments given to citizens affected by natural disasters or social disasters.
• Disaster relief funds refer to cash or goods support provided by the government to help citizens affected by natural disasters like typhoons, earthquakes, floods, or social disasters like COVID-19 stabilize their lives and recover quickly. This is a temporary support policy to respond to sudden and widespread damage that existing social security systems cannot cover.
• Characteristics of disaster relief funds include: First, urgency - the purpose is to minimize damage through quick support when disasters occur. Second, temporariness - it's a limited-time policy that ends when the disaster situation is resolved. Third, comprehensiveness - it targets all citizens affected by damage, not specific groups.
• Disaster relief funds are similar to public support funds but differ in being provided in the special situation of disasters. Since the first disaster relief fund due to COVID-19 in 2020, the term "public support fund" has been used more commonly, and the two terms are often used interchangeably.

🔎 Basic Income

• Basic income is cash payments provided regularly to all citizens without conditions.
• Basic Income (Universal Basic Income, UBI) refers to cash payments provided individually, unconditionally, and regularly to all members of society regardless of asset or income levels, employment status or work intention. It aims to guarantee a minimum standard of living and expand individual freedom and autonomy.
• Core principles of basic income include: First, universality - all members of society are recipients. Second, unconditionality - no conditions or obligations are imposed. Third, individuality - payments are made to individuals, not households. Fourth, regularity - continuous payments rather than one-time.
• Basic income differs in purpose and nature from public support funds. While public support funds are temporary support during economic crises or disaster situations, basic income is a permanent system responding to structural changes in society. However, some view the universal payment method of public support funds as having experimental characteristics of basic income.

🔎 Health Insurance Premium System

• The health insurance premium system is a system that charges premiums based on subscribers' income and assets.
• The health insurance premium system refers to the standards and methods for determining premiums that citizens enrolled in National Health Insurance must pay. Currently, South Korea divides into workplace subscribers and local subscribers, charging premiums through different methods.
• Main contents of the premium system include: First, workplace subscribers are charged premiums based on earned income, with employers and employees sharing 50:50. Second, local subscribers are charged premiums comprehensively considering income and assets. Third, dependents do not pay separate premiums.
• The reason health insurance premiums are used as selection criteria when providing public support funds is that they relatively accurately reflect income while enabling quick payments by utilizing existing administrative data. However, controversies continue due to fairness issues between workplace and local subscribers caused by different premium calculation methods and limitations where actual income changes are not immediately reflected.

5️⃣ Frequently Asked Questions (FAQ)

Q: How do I apply to receive public support funds?

A: Public support fund application methods vary depending on payment methods and government policies. Generally, the following methods are available: First, online application through government support fund integrated application sites or relevant local government websites. Second, mobile app applications using the Government24 app or specially developed dedicated apps. Third, visit applications at eup/myeon/dong community centers are possible. Fourth, phone applications may be available in some cases. For universal payments, automatic deposits to existing accounts often occur without separate applications. Applications may require identification, bank account copies, family relationship certificates, etc. Accurate application methods and required documents are announced by the government or local governments when specific support fund policies are announced, so checking official announcements is important. Also, application periods are often set, so applications must be submitted within the timeframe.

Q: What are the actual economic effects of public support funds?

A: The economic effects of public support funds are complex with various research results. Positive effects include: First, immediate consumption stimulus effects. Especially for low-income groups, most received support funds are used for consumption, showing significant economic stimulus effects. Second, helping small business owners and self-employed workers. When provided as local love gift certificates or Onnuri gift certificates, they contribute to revitalizing traditional markets and neighborhood commercial areas. Third, providing psychological stability and increasing consumer confidence. However, negative aspects also exist: First, deteriorating fiscal soundness may increase national debt and burden future generations. Second, it may serve as an inflationary pressure factor. Third, for high-income groups, it may lead to savings, limiting consumption stimulus effects. According to research by the Korea Development Institute (KDI), about 60-70% of the first disaster relief fund led to actual consumption. Ultimately, the effects of support funds vary depending on payment scale, recipients, methods, economic conditions, etc., making policy design important.