It came out recently that 16 ministries, provincial governments and police departments had been asked to investigate the activities of all 61 member trade associations of the Korea Federation of Micro Enterprise.
The Ministry of SMEs and Startups requested the investigation May 31, according to information provided by the ministry to Rep. Um Yong-soo of the opposition Liberty Korea Party at his request.
The Korea Police Agency, the Ministry of Economy and Finance, the Ministry of the Interior and Safety, the Seoul Metropolitan Government, and 12 other ministries and provincial governments took part in the investigations.
The purpose of the investigation was to determine whether the associations were operating according to standard procedures -- whether they had held general meetings within the past two years, how many members had attended those meetings and whether anything “unusual” had taken place. They also reviewed the associations’ business projects, budgets, revenues and assets.
So far, 55 of the associations have been found to be operating normally. Investigations are still underway for the other six.
Such an extensive inquiry is unprecedented since the federation was founded four years ago as the statutory body representing 3.5 million self-employed people.
The trade associations may have felt some pressure. The investigations began a few weeks after the federation rallied about 1,000 of its members for a protest in Seoul on May 14, calling for the resolution of a number of issues including the reform of the minimum-wage system.
On the surface, the inquiry was a legitimate response to a request for an administrative inspection to determine whether the trade associations qualified for membership of the federation. The Ministry of SMEs and Startups said it had received complaints about the current chairman, Choe Seung-jae, from opponents who questioned his re-election. Choe was re-elected March 30 amid concerns as to whether federation truly represented its membership.
As the ministry noted, the federation’s rally against the 2019 minimum wage hike took place Aug. 29. Since the investigations started before the rally, the ministry argued, they could not have been undertaken in retaliation for the protest.
But there were two drastic increases to the minimum wage, in keeping with President Moon Jae-in’s pledges on the stump. The first passed last year and took effect this year; the second was passed this year and will take effect next year.
The ministry’s explanation for the inquiry is not wrong, technically, in the sense that it has the authority to guide and supervise the federation in accordance with legislation enacted to protect and support microbusinesses.
But the legal justification cited by the ministry, Article 26 of the Act on the Protection of and Support for Micro Enterprises, is controversial. As Um said, the act authorizes the ministry to guide and supervise the federation, not its member associations. It is questionable whether the ministry’s lawful powers of oversight extend to the member associations.
Even if the investigations are unrelated to the minimum wage controversy, as the ministry insists, its request for such an extensive inquiry is so untimely that it gives rise to suspicion that it might be a politically motivated attempt to suppress opposition.
The federation pitched a tent in front of the National Assembly on April 14, staging sit-ins urging the passage of a bill to protect its businesses from large companies. But in May, it began to raise voices opposing this year’s minimum wage hike, attracting attention from news media focusing on the adverse effects of such a move.
It is also questionable whether checking the qualifications for membership of the trade associations, which include small-time groups of egg distributors, locksmiths and the like, was a matter of sufficient urgency to merit investigation by as many as 16 government bodies.
The government will reportedly cut its funding to the federation from 2.5 billion won ($2.19 million) this year to 2 billion won next year. Moon previously identified micro-entrepreneurs as disadvantaged people in need of government support, and upgraded the status of the agency set up to assist them to that of a ministry, but now the ministry is going to cut down on its support for them.
The self-employed took to the streets out of desperation. They view the minimum wage as a big contributor to their plight. Still, the government does not listen. Instead, it is investigating them.
If the government believes it can shut down criticism in this way, it is very much mistaken.