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In South Korea, Universal Basic Income is Having a Pandemic Moment


People wearing face masks walk by the headquarters of the Bank of Korea in Seoul, South Korea, March 4, 2021. South Korea's central bank says the country's economy shrank for the first time in 22 years in 2020.

As a recent college graduate, Lee Geon-hyung found himself in the same situation facing countless other young South Koreans.

“There was only part-time work in this job market. And the job that I had at the time just didn’t provide enough income,” says Lee.

Despite having a business degree, Lee worked as an office assistant at a semiconductor manufacturer. The company had just cut his pay, leaving him struggling to afford basic expenses in Suwon, a city on the southern outskirts of Seoul.

In South Korea, UBI is Having a Moment Amid the Pandemic
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“At a certain age, no one wants to ask your parents for help,” Lee says.

His story is common. A stunning 27% of South Koreans aged 15-29 are either unemployed or under-employed, according to government data.

But on Lee's 24th birthday, things got a little easier. That’s when he became eligible to receive a quarterly check from the government for about $220.

It’s part of a bold economic project in South Korea’s most populous province, which is finding more and more ways to give cash to its residents.

Besides giving regular checks to 24-year-olds, Gyeonggi Province has also sent cash to all its residents during the coronavirus pandemic — on top of the stimulus payments the central government has given South Koreans.

Those kinds of direct cash payments are becoming more popular globally, especially during the pandemic, as governments try to stimulate their economies and assist those unable to work.

The trend is encouraging to supporters of universal basic income, or UBI, who say all citizens should receive a regular amount of money from the government.

FILE - Gyeonggi Province Governor Lee Jae-myung speaks during an interview with Reuters in Suwon, South Korea, Dec. 16, 2020.
FILE - Gyeonggi Province Governor Lee Jae-myung speaks during an interview with Reuters in Suwon, South Korea, Dec. 16, 2020.

For decades, UBI was dismissed as a fringe economic idea — “just a theory in the textbooks,” according to Gyeonggi Governor Lee Jae-myung, the driving force behind his province’s UBI project.

“But I think this belief is now gaining momentum,” he told VOA in a recent interview.

UBI explained

Lee is a longtime proponent of UBI. He frequently mentions the “fourth industrial revolution,” which refers to how automation and other technologies are reshaping the way humans manufacture products and interact with each other.

No longer is it necessary to visit a bank, shopping mall, movie theater, or restaurant. For many, even physically going to a workplace is a thing of the past.

FILE - A part of park is taped off with a sign which reads "Access restrictions to prevent the spread of COVID-19" for the social distancing measures and a precaution against the coronavirus at a park in Seoul, Dec. 23, 2020.
FILE - A part of park is taped off with a sign which reads "Access restrictions to prevent the spread of COVID-19" for the social distancing measures and a precaution against the coronavirus at a park in Seoul, Dec. 23, 2020.

The pandemic has dramatically accelerated that dynamic, with social distancing measures ensuring as many tasks as possible are conducted digitally, without human interaction. In South Korea, one of the world’s most technologically advanced societies, it's referred to as the “untact” environment.

“Since the pandemic began, we’ve seen the digital untact environment that was created, and how you don’t need as much human labor to produce things anymore,” says Governor Lee. “Without UBI, I believe many feel the very capitalist system itself is in crisis.”

To help prevent what they predict is a coming jobs apocalypse, UBI supporters say governments should provide a living wage to all citizens, regardless of their income level or job status. Not only would it protect jobs and reduce poverty, they argue, it would also stimulate the economy.

A surprisingly wide range of figures have supported some form of guaranteed income — from political philosopher Thomas Paine and civil rights leader Martin Luther King Jr. to Silicon Valley executives, such as tech magnate Elon Musk and Facebook founder Mark Zuckerberg.

Dozens of countries have adopted limited forms of UBI, including Finland, Kenya, Iran, and even the U.S. state of Alaska, which gives a yearly payment to citizens thanks to a state-owned investment fund financed by oil revenues.

Local currency

In Gyeonggi, universal basic income takes the form of a local currency, meaning the money is deposited into an account and must be spent at registered local businesses within a certain amount of time.

“Setting an expiration date on the funds has a huge impact,” says Lee Chung-hwan, who operates a traditional outdoor market in Suwon.

People wearing face masks walk through a market in Seoul, South Korea, March 4, 2021.
People wearing face masks walk through a market in Seoul, South Korea, March 4, 2021.

On a recent brisk weekday morning, the market was vibrant, with many shoppers using their local currency cards to buy fresh cuts of beef or bags of kimchi, Korea’s ubiquitous side dish.

“The relief funds have been a huge help to our market,” says Lee. “We have people coming here who would ordinarily never shop at a local market.”

“And they also buy more,” he adds.

Yu Chang-geun, who runs a Suwon coffee shop, says more customers use the local currency than a regular credit or debit card.

“It helps a lot, especially for small and medium sized businesses,” he adds.

Criticism

But UBI has plenty of critics. They say the idea amounts to populism that would strain existing welfare programs.

“What proponents of basic income overlook is that individuals need money and public services. And the state must provide those services. But they’ll collapse if UBI is adopted,” says Woo Seok-jin, economic professor at Seoul’s Myongji University.

Woo endorses more targeted government assistance programs. He argues that de-linking employment and income is far too drastic.

“Pre-empting future risks is good, but changing the system because of a future that hasn’t even arrived yet is just not realistic,” he says.

Many economists also reject the premise that technological advancements will lead to catastrophic job loss.

“Yes, technology eliminates jobs, but it also creates jobs,” says Alejandra Grindal, who researches global economic trends at Ned Davis Research, an investment strategy organization.

Perhaps the biggest argument against universal basic income is that the theory is largely untested. Many of the global experiments discussed as UBI in reality have amounted to more targeted forms of government assistance.

Even in South Korea, the so-called UBI programs for now are meant to address the very specific problems of youth unemployment and the coronavirus pandemic. Neither plan amounts to a “basic income,” if that is defined as a living wage.

That uncertainty could lead to many unintended consequences. For instance, employers might pay employees less because they know they will be subsidized by the government, Grindal says.

“A lot of interesting things could happen along the way that weren’t intended,” she adds.

Political impact

Whether or not his policies are true UBI, the initiative seems to be helping Governor Lee’s political prospects.

The trim, silver-haired 56-year-old has soaring approval ratings. He is widely expected to soon announce a run for the presidency in 2022. Several recent opinion polls show him as the frontrunner, easily beating other candidates in his left-leaning Democratic Party.

He’s been compared to former U.S. President Donald Trump and Vermont Senator Bernie Sanders — comments he says are only partly justified.

“I do believe that in a new era, we need a new order and new policies,” says Lee, who believes UBI could gradually be expanded to the national level.

Lee’s office doesn’t shy away from the transformational aspects of his proposals.

Outside the provincial government building, an advertisement depicts a cartoon superhero with the motto “New Gyeonggi, Fair Gyeonggi” emblazoned across his chest. He soars through the air, one arm punching the sky, the other delivering a cash handout card.

“Boost local businesses with the Gyeonggi local voucher,” the sign reads. Nearby, multi-colored banners wave from a row of streetlights, announcing: “All Gyeonggi Residents Receive 100,000 won.”

Lee did not tell VOA whether he will run for president. Instead, he insists he’s only trying to find big solutions to big problems.

“When the situation changes, we have to find new ways to move forward,” he says. “And I believe politicians need to be the ones to find new ways.”

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