Gap in Welfare Spending Forecasts Hits Record 52 Trillion Won

The government’s projection for welfare spending over the next five years has diverged from the National Assembly Budget Office’s own forecast by the widest margin on record. Critics say the government understated welfare spending, classified as mandatory expenditure, while raising its 2030 total spending plan above 1,000 trillion won on the back of a semiconductor-driven revenue windfall.

Mandatory welfare spending will rise to 273.8 trillion won in 2030 from 199.9 trillion won this year, an average annual increase of 8.2%, according to the budget office’s medium-term fiscal outlook for 2026 to 2030, released on the 3rd. The national fiscal management plan the government submitted to the National Assembly in September put the average annual growth rate for the same period at 6.9%.

The cumulative five-year difference between the two projections amounts to 51.9 trillion won, the largest since 2013, when the budget office began publishing its own medium-term fiscal outlook to support parliamentary budget reviews. The two sides have differed every year, but this is the first time the gap has exceeded 50 trillion won.

By category, the difference was largest for National Pension spending at 21 trillion won, followed by employment insurance at 9.6 trillion won and the basic pension at 6.4 trillion won. For 2030, the budget office projected total spending, including mandatory welfare outlays, at 1,035.8 trillion won — 30.6 trillion won more than the government’s plan of 1,005.2 trillion won.

“The government is taking an overly optimistic view of the mandatory welfare spending burden that will grow with population aging,” said Kim Woo-chul, head of the Korean Association of Public Finance. “If the increase in spending is not properly reflected, the predictability of national finances will inevitably decline.”…Read more by Seoul Economic Daily