The South Korean government will temporarily increase diesel price-linked subsidies for trucks, buses, and taxis to ease the burden on households amid soaring oil prices triggered by the Middle East crisis.
Deputy Prime Minister and Minister of Economy and Finance Koo Yoon-chul announced the measure at the first Emergency Economic Ministers' Meeting on the 11th, stating, "We will minimize public anxiety caused by high oil prices and prevent disruptions to industry and logistics."
The government has converted its regular Economic Ministers' Meeting into a weekly Emergency Economic Ministers' Meeting and elevated the joint emergency response task force to vice-ministerial level to strengthen economic monitoring and rapid response capabilities.
As part of measures to address high oil prices, Koo announced, "We will temporarily increase diesel price-linked subsidies for buses, trucks, and taxis." The government currently provides subsidies covering 50% of the amount exceeding the base price of 1,700 won per liter of diesel. While specific details of the subsidy increase were not disclosed at the meeting, raising either the base price or the subsidy rate is considered likely.
The government also said it would consider fuel tax cuts along with expanded support through management stabilization vouchers and emergency business stabilization funds for small business owners. Additionally, authorities plan to crack down on hoarding and stockpiling of petroleum products while monitoring for financial market manipulation to ensure stability for households, industries, and financial markets during the crisis.
The government plans to expand its existing market stabilization program of over 100 trillion won if necessary and will work closely with the Bank of Korea to implement additional market stabilization measures such as emergency buybacks and outright purchases of government bonds in a timely manner. The government will also closely monitor supply conditions for items highly dependent on the Middle East and swiftly designate them as economic security items if needed. For key raw materials such as naphtha, the government will quickly establish fiscal and financial support measures to secure alternative import sources and respond to supply disruptions.
Deputy Prime Minister Koo stated that the government would also pursue policies to address structural economic issues and strengthen future foundations. The meeting discussed plans for a major overhaul of the retirement pension system for the first time in 20 years. The government plans to finalize measures for introducing a fund-type retirement pension by July this year and push for related legislative amendments within the year. Mandatory participation will be phased in for all workplaces, with measures to ease the burden on small and medium-sized enterprises.
The government will also establish a basic plan for employment stability during industrial transition by June this year. To respond to industrial restructuring driven by artificial intelligence and decarbonization, the government will expand AI competency education across all life stages and employment support for promising new industries, while proactively providing career planning and job transition consulting for current workers.
"Despite significant external uncertainties, our economy has solid fundamentals in key industries and crisis response capabilities, including 208 days' worth of oil reserves," Koo said. "I ask the public to trust the government and calmly continue their daily economic activities."
