Korea Employers Federation Submits Proposal to National Assembly on Boosting Economic Vitality: "Fundamental Economic Structure Improvement Needed"

On the 20th, 40 legislative improvement tasks in 8 economic and labor sectors submitted to the National Assembly

[Asia Economy Reporter Kim Ji-hee] “The global economy is facing a massive complex crisis due to the unexpected public health emergency caused by the novel coronavirus infection (COVID-19), and our real economy is also in an emergency phase due to disruptions in production activities, decreased exports, domestic demand contraction, and increased inventory.”

The Korea Employers Federation (KEF) announced on the 23rd that it submitted a “Business Community Proposal for Revitalizing the Economy and Advancing Employment and the Labor Market” to the National Assembly on the 20th. The proposal contains requests for legal and institutional improvements to enhance corporate vitality and secure management stability.

KEF stated, “Last year, our economy recorded the lowest economic growth rate in over a decade at 2%, due to continued sluggishness in key real economy indicators, and this year, significant damage is expected due to COVID-19. To restore corporate investment vitality based on a market economy beyond short-term fiscal and financial measures, it is fundamentally necessary to improve the economic structure.”

The proposal submitted by KEF includes 40 legislative improvement tasks across eight economic and labor sectors. Specifically, it covers ▲ legal and institutional improvements to enhance corporate vitality ▲ legal and institutional improvements to secure management stability ▲ legal and institutional improvements to increase labor market flexibility ▲ improvement of high-cost, low-productivity structures ▲ establishment of rational labor-management relations ▲ establishment of a sustainable social security system ▲ construction of an advanced safety system ▲ securing appropriateness of management responsibility and improvement of penalties. KEF requested that these be actively reflected in the legislative discussions of the remaining 20th National Assembly and the upcoming 21st National Assembly.

First, KEF pointed out that corporate burdens are increasing due to high corporate tax rates compared to major competing countries, and argued that the top corporate tax rate should be lowered to the OECD average level of 22% and the minimum tax system should be abolished. It also emphasized the urgent need for improvements in the Commercial Act, such as introducing management defense measures and relaxing shareholder meeting resolution requirements to secure management stability for Korean companies.

Furthermore, KEF stressed the need to modernize labor-management relations laws and systems, which are globally considered backward. KEF said, “The flexible working hours system and selective working hours system should be improved, and the reasons for permitting special (authorized) extended work should be expanded to increase the flexibility of working hours systems,” adding, “Regulations prohibiting strike actions that involve occupying facilities within workplaces are also necessary to build balanced labor-management relations.”

In addition, KEF proposed clearly defining the minimum wage calculation standard hours as ‘prescribed working hours’ only in the Minimum Wage Act and specifying the insurance premium determination cycle to be up to five years to alleviate the burden of health insurance premiums.

This content was produced with the assistance of AI translation services.