'Tightly Pro-Labor' Super Ruling Party Raises Concerns in Business Circles

Economic Organizations "Expect Leadership to Overcome COVID-19 Crisis" Joint Commentary
Concerns Over Pro-Labor, Anti-Business Policies Such as Ratification of ILO Core Conventions and Strengthened Regulation of Large Corporations

[Asia Economy Reporters Changhwan Lee, Gimin Lee] As the general election ended with a landslide victory for the ruling Democratic Party of Korea, the business community's feelings toward the 21st National Assembly have become complicated. This is because the Democratic Party of Korea has already indicated through its pledges that it will strengthen pro-labor policies.

The business community expressed concerns that the government's pro-labor and anti-market policies might be further reinforced in the 21st National Assembly, potentially making the already difficult economy, strained by the novel coronavirus disease (COVID-19), even harder.

On the 16th, economic organizations simultaneously issued statements urging the 21st National Assembly to unite efforts to overcome the economic crisis exacerbated by COVID-19. The Korea Chamber of Commerce and Industry stated, "The 21st National Assembly bears a heavy responsibility at a time when the economy and people's livelihoods, which have been weakened by the COVID-19 crisis, need to be restored and new avenues for the Korean economy must be opened."

The Korea Employers Federation emphasized, "We expect the 21st National Assembly to play a central role and demonstrate leadership in navigating the complex economic crisis triggered by the COVID-19 situation and in restoring economic vitality." The Federation of Korean Industries also urged in its statement, "Each party should humbly accept the will of the people expressed in the general election and unite efforts to overcome the national crisis."

The reason economic organizations have openly expressed significant concerns about the economy is not only due to the realization of an economic recession caused by COVID-19 but also because of worries about the Democratic Party of Korea's future policy direction. The Democratic Party of Korea proposed numerous pro-labor and anti-business policies as election pledges, and their landslide victory is expected to strongly empower the implementation of these policies.

The Democratic Party of Korea's economic and labor policy pledges can be summarized as strengthening the competitiveness of small and venture businesses, regulating and monitoring conglomerates and large corporations, and protecting non-regular workers. While there is a strong intention to foster small and venture businesses through innovative growth, policies aimed at revitalizing large corporations or existing industries are hard to find.

An official from an economic organization said, "With the emergence of a super ruling party, concerns about strengthening corporate regulations have increased," adding, "This could reduce overall economic vitality and worsen an already difficult economic situation."

The labor pledges are even more worrisome. Policies focused on labor, such as the regularization of non-regular workers, strengthening the responsibility of primary contractors, and prioritizing ratification of the International Labour Organization (ILO) fundamental conventions, are likely to act as factors that reduce economic vitality.

Among these, the emphasis on ratifying the ILO fundamental conventions is a pledge that the business community finds particularly burdensome. If the ILO conventions are ratified, even dismissed or unemployed workers could be accepted as union members. Economic organizations are concerned that since labor rights in Korea have already been strengthened to an advanced country level and labor-management relations are abnormal, ratification of the ILO conventions could significantly restrict corporate activities.

A Korea Employers Federation official explained, "Unlike other countries, Korea's labor-management relations are confrontational and combative. If dismissed and unemployed workers are allowed to join unions, the unions' collective bargaining and collective action rights will be strengthened and activated, increasing difficulties for companies."

There is also a possibility that controversy over income-led growth will resurface. Since taking office, the Moon Jae-in administration introduced an income-led growth policy through a significant increase in the minimum wage. However, due to side effects such as rising unemployment and severe difficulties for self-employed businesses caused by the rapid increase in the minimum wage, the income-led growth policy has been effectively shelved. Nevertheless, concerns have been raised that the ruling party’s strengthened position could lead to a revival of the income-led growth policy.

Of course, some argue that the ruling party might also focus on policies to support companies that are facing unprecedented difficulties due to COVID-19.

Kim Kyung-soo, Professor Emeritus at Sungkyunkwan University, said, "The economic shock from COVID-19 is so severe that it is not easy for the ruling party to push forward with pro-labor pledges as they are," adding, "Given the very difficult economic situation, the ruling party needs to change its perspective on labor and the business investment environment."

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