Ministries oppose legislation plan to compensate virus-hit small merchants

February 15, 2021

Fiscal and health authorities have expressed negative responses to a proposal from top officials and the ruling party to introduce a bill that would enable compensation for losses by small businesses due to official antivirus measures, political sources said Monday.

Last month, the ruling Democratic Party (DP) began an internal process to enact a law on financially compensating the self-employed and small merchants ordered to suspend or cut down business operations under state-imposed social distancing requirements.

Political discussions surrounding the compensation bill picked up steam after President Moon Jae-in and Prime Minister Chung Sye-kyun chimed in, having publicly instructed authorities to review ways to institutionalize compensation.

A board at a cafe in Seoul shows a message that says "(Indoor business at cafes) is our right to survive" on Jan. 6, 2021, amid a ban on such business for two weeks to prevent the spread of COVID-19. (Yonhap)
Finance Minister Hong Nam-ki, who doubles as the deputy prime minister for economic affairs, presides over a meeting of economy-related ministers at the government complex in Seoul on Jan. 15, 2021. (Yonhap)

A board at a cafe in Seoul shows a message that says “(Indoor business at cafes) is our right to survive” on Jan. 6, 2021, amid a ban on such business for two weeks to prevent the spread of COVID-19. (Yonhap)

The finance ministry, however, recently sent an official response to the National Assembly’s health and welfare committee, stating that it cannot agree to the plan to enable compensation based on binding laws as opposed to one-off parliamentary or executive decisions.

“Restriction or banning of public gatherings and business closures or restrictions are general social constraints that are applied to a vast number of unspecified people to prevent the spread of contagious diseases,” the ministry said in the statement addressed to the committee.

The ministry also underscored the need for caution in adopting such a bill, considering the vagueness in the scope and criteria of business damage and the difficulty of substantiating the losses.

The health ministry has also sent a separate statement to the committee, in which it said its jurisdiction had little relevance to matters related to the self-employed and small merchants.

“We must be prudent in including a specific clause on compensating losses in the infectious disease prevention act, of which the (primary) purpose is to protect the lives and the health of the public,” the health ministry said.

The negative opinions from the ministries on the compensation bill portend a new round of clashes in an ongoing policy tug-of-war between fiscal authorities and the DP over government spending.

Owners of cafes, fitness studios, karaoke rooms, cram schools and other businesses took a crushing blow as they have been ordered to close or limit business operations as part of the government’s social distancing guidelines aimed at containing the latest wave of mass coronavirus infections.

The finance ministry initially responded negatively toward the legislation plan, citing budget constraints, but after repeated calls from the prime minister, Finance Minister Hong Nam-ki had said that the ministry has recognized the need to institutionalize compensation measures and had been reviewing it before the president delivered the instructions.

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