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| Four leading conglomerate heads greet each other during a New Year ceremony held at the Korea Federation of SMEs Grand Hall in Seoul, Jan. 2, 2019. From left Samsung Electronics Vice Chairman Lee Jae-yong, SK Group Chairman Chey Tae-won, Hyundai Motor Group Chairman Chung Euisun and LG Group Chairman Koo Kwang-mo. / Yonhap |
By Kim Hyun-bin
President Moon Jae-in is scheduled to hold a New Year's press conference later this month, while businesses in the country are on the lookout for comments that could affect their respective sectors.
The progressive administration has pushed ahead with the passage of new bills and regulations in recent years aimed at bolstering the rights and welfare of workers, raising the minimum wage and shortening mandatory work hours.
But many businesses are complaining that the new regulations have become tougher to follow considering plummeting sales and earnings amid the coronavirus pandemic. Businesses have also accused the government of railroading the passage of these regulations through a National Assembly dominated by the ruling camp.
Businesses can hardly be blamed, considering statistics illustrating how hard many of them have been impacted by the coronavirus pandemic.
The third-quarter net profit at 687 companies listed on the Korea Composite Stock Price Index fell almost 10 percent compared to the same period of 2019 to 56 trillion, while sales dropped almost five percent to 1,400 trillion won, according to the Federation of Korean Industries. Operating profit also fell more than six percent to 84 trillion won. The figures become even more dismal when semiconductor giant Samsung Electronics is taken out of the equation. Combined net profit sank 21.61 percent, while sales fell 6.73 percent and operating profit plummeted 18.84 percent and if Samsung Electronics is excluded.
Businesses are bracing for Moon's announcement of his latest economic agenda in the upcoming the press conference.
Many critics and business leaders have called on the Moon administration to soften its approach in dealing with businesses. Korea Chamber of Commerce and Industry (KCCI) Chairman Park Yong-maan said previously, commenting on the passage of an economy-related bill, "It seems that our stance has been neglected and we expect a one way street."
Korea Enterprises Federation Chairman Sohn Kyung-shik said during a press conference last year, "Excluding the 1998 Asian financial crisis, [2020] has been the worst, with the passage of scores of regulations, including commercial and fair trade laws, that have increased the burden on corporate management."
The two key words cited the most by business leaders were "COVID-19" and "regulations."
According to the Korea Employers Federation, 213 bills were issued last year that businesses claim have only made it harder for them to boost earnings.
The most controversial are the so-called "three fair economy bills"― the Commercial Act, the Fair Trade Act and the Financial Group Supervision Act?― which were pushed by Moon since he stepped into office in 2017. The president claimed the regulations are aimed at enhancing the global competitiveness of Korean businesses.
"The fair economy bills are not causing difficulties for our firms, while we need to think of them as making our firms healthier and enhancing global their competitiveness," President Moon said at an event held at the KCCI last month.
But many business officials beg to differ.
"The only thing the Moon administration has done is to slap regulations and increase the corporate tax rate," a high-ranking business official said. "The government faces limitations in creating jobs, so it is pressuring companies to open more vacancies amid the pandemic," the official added. "I don't think the government has a well-organized plan and I don't expect President Moon to announce anything significant for the industry in his upcoming press conference."
New Deal initiatives
In July, President Moon unveiled the road map of a "Korean New Deal" stimulus package involving more than 160 trillion won in investments to create 1.9 million jobs over the next five years.
The New Deal package primarily consists of two pillars ― the Digital New Deal and Green New Deal.
The progress of the New Deal is expected to become a major agenda in the upcoming press conference.
The government plans to inject 12.7 trillion won in 2021 for digital New Deal projects, including the construction of a nationwide 5G network, and intends to spend 13.2 trillion won to bolster green industries and eco-friendly sectors.
However, industry watchers say the initiatives are only in the planning stage and that there are no concrete plans for individual businesses to launch them. Many businesses grumble in private that the audacious plan could end up increasing their financial burden amid the pandemic
"The New Deal initiatives look to be grand in size, but a closer look at them shows there are no concrete plans from the government to initiate the measures. Right now, they are merely hopes and dreams and are only seen as the government's push to get companies to invest in the initiatives amid the pandemic," an industry source said.
