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Controversy rises over 'profit sharing' idea

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By Kang Seung-woo

Debates are rising over ruling Democratic Party of Korea (DPK) chief Lee Nak-yon's proposal for a profit-sharing scheme aimed at encouraging profitable companies to distribute their earnings to those hit hard by the COVID-19 pandemic.

Democratic Party of Korea (DPK) Chairman Rep. Lee Nak-yon attends the party's Supreme Council meeting at the National Assembly in Seoul, Monday. / Yonhap
Democratic Party of Korea (DPK) Chairman Rep. Lee Nak-yon attends the party's Supreme Council meeting at the National Assembly in Seoul, Monday. / Yonhap
Although the ruling side is stressing that it will not twist anyone's arm and will instead offer various incentives, such as corporate tax breaks, to those voluntarily adopting the scheme, the opposition is critical of the idea, claiming that it goes against market economy principles. Plus, business owners are also skeptical of the proposal, saying there are no clear criteria on which companies are profitable.

There is speculation that tech companies such as Samsung Electronics and LG Electronics, the nation's top mobile messenger operator Kakao Corp., and Woowa Brothers, the operator of delivery app Baedal Minjok, would be subject to the scheme, as the companies have seen their sales grow amid the prolonged pandemic.

"In Europe, those who are prosperous in the pandemic are called economic winners from the COVID-19 crisis and are required to fulfill their social responsibility," Lee said during Monday's party meeting.

"Now we need to discuss various ways for profit-making companies to help those plagued by the coronavirus."

Rep. Hong Ik-pyo, the DPK's chief policymaker, said, Tuesday, that the party plans to launch a relevant taskforce.

In anticipation of possible backlash from opposition arguments that the idea is a threat to capitalism, the party is stressing that the profit-sharing scheme would not be compulsory and that each company's voluntary participation would be encouraged through various incentives.

In response, the opposition parties, led by the main opposition People Power Party (PPP), are against the plan.

"We are at a loss to see the ruling party seeking to supplement empty state coffers by confiscating assets from those who worked hard," PPP spokesperson Rep. Kim Eun-hye, said claiming the idea is unconstitutional.

Some members of the business sector are also opposing the idea, calling it a populist policy and political arm-twisting.

"There is a limit to decide who made profits thanks to the pandemic," said an official in the business sector.

Although the minor opposition Justice Party welcomed the proposal, it said the plan was too "emotional" and "easygoing" to break through the difficulties.

This is not the first time the idea of profit sharing has stirred controversy in Korea.

In 2011, then Korea Commission for Corporate Partnership Chairman Chung Un-chan tried to implement the system under the then-Lee Myung-bak administration, but he withdrew the plan after facing strong backlash from business leaders.

Back then, Samsung Chairman Lee Kun-hee came under the spotlight for his sarcastic comments regarding Chung.

"I'm confused about whether it is a term used in socialist states or capitalist countries," he said at the time. "I grew up in an entrepreneur's family and have studied economics. However, I've never heard of the concept."


Kang Seung-woo ksw@koreatimes.co.kr


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