What is “Gyeonggi Pay”?

Written by Eashan Trehan

Several years ago, rising levels of automation led to the beginning of an intense, ongoing debate on “Universal Basic Income” (UBI). Supporters of the idea argue that as automation replaces the need for human labour, leading to loss of jobs, every person should be entitled to a minimum basic income, handed out by the government. Although the idea has struck a chord with certain sections of society, there had not been any significant progress or adoption of the idea, of note… that is, until the advent of Covid-19. Governments across the world have been forced to take a harder look at UBI, and some, like the United States of America and Hong Kong have taken the plunge with stimulus schemes and cash handouts. However, detractors have criticised the decisions, arguing that the handouts need to be more targeted towards poorer sections of society and should be aimed at supporting local businesses, rather than ending up being spent on goods and services being offered by mega corporations.

To that end, an interesting experiment that is presently being carried out in a small part of South Korea, called “Gyeonggi Pay”, is giving small businesses and local households alike a reason to cheer. The local government in the Gyeonggi-do Province of South Korea is handing out electronic payment cards to residents, allowing them to spend KRW100,000 won (US$79.85). While it may sound like any other UBI scheme or akin to the Hong Kong government’s one-time HK$10,000 handout at first, there is a distinctive catch to Gyeonggi Pay. The electronic card that residents receive can only be used to pay at local neighbourhood stores. This unique feature of the scheme is meant to have a more concentrated “trickle down effect”, that should help stimulate local neighbourhood economies. The fact that residents can only spend within a short radius gives a much fairer shot to small businesses that are struggling to survive amidst the pandemic. It also ensures that the monetary stimulus is not completely absorbed by bigger corporations.

This innovative take on UBI is forcing a rethink on how stimulus packages should be designed. So should the rest of South Korea and the world adopt the Gyeonggi Pay model?

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Gyeonggi Province sets example for universal basic income

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