Four Major Economic Organizations "Facing Dire Situation Due to Regulatory Tsunami... Requesting Supplementary Economic Legislation"

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[Asia Economy Reporter Kiho Sung] Four major economic organizations including the Korea Employers Federation, Korea Federation of Small and Medium Business, Korea Federation of Medium-sized Enterprises, and Korea Listed Companies Association expressed concerns that "a slew of regulatory bills such as the Commercial Act, Fair Trade Act, Financial Group Supervision Act, Labor Union Act, and Employment Insurance Act for Special Type Workers have been passed in the regular National Assembly, leaving us in a bleak situation on how to cope," and requested supplementary legislation.

In a statement released that day, these organizations said, "Due to the minimum wage increase, rapid reduction of working hours, globally very low labor flexibility, and confrontational and combative labor-management relations, the competitiveness of our companies is steadily declining," adding, "(In this situation) the recently passed economic-related laws will further intensify the negative impact on the national economy."

They continued, "All the recently passed economic-related laws impose burdens that are difficult to bear, but to help our companies cope even a little immediately, we request that at least a few items in the Commercial Act, Fair Trade Act, and Labor Union Act be promptly reflected through supplementary legislation (preferably in this extraordinary session of the National Assembly)."

Regarding the Commercial Act, the economic organizations pointed out, "Although voting rights are individually limited to 3% when electing audit committee members separately, in a market structure where foreign funds or influential hostile companies can unite to secure over 20% of voting rights, the company's defense rights inevitably become powerless," adding, "They can enter the board of directors, the highest decision-making body, access core technologies and information, and disrupt major investment decisions." They further argued, "Fundamentally, the restriction on voting rights excessively regulates shareholder rights and private property rights, which may be unconstitutional," and claimed, "Raising the subsidiary shareholding requirements for holding companies (listed companies from 20% to 30%, unlisted companies from 40% to 50%) while limiting voting rights to 3% is also contradictory from a policy perspective." They also appealed, "Since the Commercial Act is enforced immediately upon promulgation, companies that must newly appoint audit committee members at the shareholders' meetings in February or March next year are helpless." Accordingly, they requested ▲a minimum one-year grace period before enforcement of the Commercial Act, ▲a minimum one-year stock holding period for exercising voting rights when electing audit committee members separately, and ▲exclusion of separately elected audit committee members from director qualifications.

Regarding the Fair Trade Act, they emphasized, "Expanding the scope of internal transaction regulations to include other affiliates in which regulated companies hold more than 50% of shares will critically hinder corporate strategies to enhance industrial competitiveness such as discovering growth engines, entering new industries, specialization, spin-offs, and acquisitions," and urged, "At least indirect shareholding regulations should be excluded from the regulatory scope."

They added, "Although exclusive prosecution rights were maintained in this legislation, reports indicate that some are pushing again for their abolition, causing growing concerns and anxiety in the corporate field," and stated, "Reducing criminal penalties for business activities is a global legislative trend, and focusing solely on punishment may undermine corporate autonomy and creativity, potentially shrinking the economy itself. Therefore, the Fair Trade Commission's exclusive prosecution rights must be preserved."

Regarding the Labor Union Act, they stressed, "Even now, with labor power concentrated on the labor side, the autonomy of company-specific union membership for dismissed and unemployed workers and the deletion of the employer's wage payment prohibition for union officials have further tilted the labor-management landscape toward labor," adding, "If the employer's counter-rights are not guaranteed, labor-management conflicts and confrontations at industrial sites will intensify, and companies will inevitably succumb to militant unions' excessive demands and pressures." Accordingly, they requested legislation reflecting to some extent three items: abolition of the direct criminal penalty system for employer acts among the doubly regulated unfair labor practice penalties, partial allowance of replacement labor during strikes, and prohibition of union occupation of workplaces. They also urged clear legislation to allow non-company union members such as dismissed and unemployed workers to enter workplaces only in union offices and only when essential.

Furthermore, to mitigate issues arising from the deletion of the wage payment prohibition for union officials, they added that legislation is needed to include penalty provisions to sanction union demands exceeding the limit of working hour exemptions and related industrial actions, as well as to exclude government-recommended public interest members from the Working Hours Exemption Review Committee.

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