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[Editorial] Let firms loose

Democratic Party should review regulation bills, accept offer to revamp labor laws

Business lobbies vowed to try to block legislation of three business regulation bills on Wednesday.

Their joint response reflects their sense of crisis and the urgency of the legislation situation.

The government has proposed bills to revise the commercial law and the fair trade law and enact the financial group supervision law. It trumpets them as “a trio of fair economy bills.” But Sohn Kyung-shik, chairman of the Korea Enterprises Federation, warned that “they regulate businesses more strongly than global standards do” and that “they can shake the managerial right of businesses.”

Sohn warned that if foreign speculative capital and investors are allowed to be board members, technology and business secrets can be exposed to competitors.

But the presidential office said that the three bills should be legislated without a hitch.

In his meeting with chief executives of large companies, hosted by the federation on Tuesday, Rep. Lee Nak-yon, chair of the party, said that “it is difficult to delay legislation of the bills or change their direction.” He effectively confirmed that the party will push legislation as scheduled.

Businesses gasp in a flood of regulations.

“More than 200 business regulation bills are already introduced to the National Assembly,” Sohn said, “They can undermine the foundation of managerial rights and strike a heavy blow to the execution of corporate (investment).”

Furthermore, the economic impact of the COVID-19 pandemic is threatening the survival of many companies.

Companies are leading the nation’s efforts to revive the economy in this difficult time. Now is time to encourage them.

The US Senate Democrats presented a bill to provide more than $350 billion over a decade to build its industrial capacity. China is pushing “Made in China 2025” a strategic plan to further develop the manufacturing sector into high-end producers. But Korea is trying to shackle its firms and tell them to compete in the global market. It should reconsider legislation of the bills.

Recently, Kim Chong-in, chairman of the emergency committee of the main opposition People Power Party, proposed to the ruling party to revise labor laws.

He offered to revamp labor laws simultaneously with the legislation of the three bills. “Labor laws have been a sanctuary so far,” he said Monday. “This issue should be resolved now that the economy is in a state of transition to the post-COVID fourth industry.”

Rigid labor laws and manufacturing-oriented industrial relations will lose much of their footing in the process of shifting to the “fourth industrial revolution.” The labor market is one of the areas that Korea urgently needs to rectify.

South Korea ranked No. 13 out of 141 countries surveyed in the World Economic Forum’s competitiveness index in 2019. But it ranked 84th in the flexibility of wage determination, 102nd in hiring and firing practices, and 130th in industrial relations. The International Monetary Fund and the Organization for Economic Cooperation and Development would urge Korea frequently to increase its labor flexibility.

Recently Hyundai Motors disciplined a number of assembly workers at its Ulsan plant for their abnormal working practices, such as two or three workers taking turns resting while one worker does their jobs as well. They were found to have watched movies on their cellphones while resting.

Notwithstanding this situation, Lee said that “an argument that firing should be made easy and wages should be determined flexibly are so harsh on workers.” He expressed objection to Kim’s labor reform proposal.

The playing field of labor relations has become severely lopsided in favor of unions, particularly those of large companies like Hyundai Motors, under the government of President Moon Jae-in.

In case that labor unions strike, backed by their militant and gigantic umbrella groups, lockout is the only response available to make for their companies. Businesses are not allowed to put in substitute workers during the period of strike.

The Moon administration has poured out pro-labor policies. They include a semimandatory conversion of outsourced workers into in-house employees, a sharp rise in the minimum wage and a rigid 52-hour workweek. These are steps to increase the corporate burden.

If it keeps choking businesses, the Korean economy will slide backward. The ruling party must defer the business regulation bills and accept the labor reform proposal.
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