Business circles launch all-out battle to block Serious Accident Punishment Act... "Bill threatens survival of SMEs" (Comprehensive)

[Asia Economy Reporter Su-yeon Woo] The business community is mounting an all-out effort to block the enactment of the Serious Accident Corporate Punishment Act being promoted by the National Assembly. For small and medium-sized enterprises (SMEs), this bill, which could impose large fines amounting to hundreds of millions of won, poses a threat to the very existence of the companies, prompting continuous appeals until the very end.

On the 16th, 30 economic organizations and industry-specific associations, including the Korea Employers Federation, the Korea Chamber of Commerce and Industry, the Federation of Korean Industries, and the Korea Federation of SMEs, issued a statement opposing the enactment of the Serious Accident Act and urged the suspension of legislative efforts.

The business community argued that if entrepreneurs cannot shake off the fear of when and how they might be severely punished, overall business activities will inevitably shrink, calling for a halt to the legislation. They pointed out that the scope of corporate executives' obligations in the bill is vague, and it imposes minimum prison sentences of 2 to 5 years and punitive damages of 3 to 5 times the amount, which would become additional regulations that strangle companies.

Kim Yong-geun, Vice Chairman of the Korea Employers Federation, along with key representatives from major economic organizations, held a joint press conference on the "Legislation of the Serious Accidents Punishment Act" on the 16th at the Press Center in Jung-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

"Serious Accident Act Threatens the Survival of SMEs... Must Consider Reality"

In particular, the business community is concerned that large fines will severely impact SMEs. At the press conference, Seo Seung-won, Vice Chairman of the Korea Federation of SMEs, said, "Fortunately, the National Assembly has excluded small business owners from the application, but 99% of SMEs have owners who also serve as CEOs," adding, "In such cases, if an accident occurs, the person responsible for managing the aftermath and handling the incident until the end would be detained."

Vice Chairman Seo emphasized the importance of shifting the policy focus from indiscriminate post-accident punishment to prevention and guidance, expressing concern about the reality faced by SMEs. He said, "The reality is that SMEs do not fail to comply with the law intentionally but are unable to comply," adding, "Regulations change frequently, there is no dedicated staff, and SMEs, where the CEO plays three roles?CEO, site manager, and sales?cannot possibly handle this law."

Kim Yong-geun, Executive Vice Chairman of the Korea Employers Federation, also said, "SMEs, which have limited personnel and investment in industrial safety, are constantly exposed to the risk of punishment and cannot shake off the associated concerns and burdens," adding, "In the UK, where the Corporate Manslaughter and Corporate Homicide Act is applied, only SMEs with relatively insufficient industrial safety capabilities were punished."

"Need to Shift Industrial Safety Policy from Post-Accident Punishment to Pre-Accident Prevention"

The business community unanimously called for changing South Korea's industrial safety policy from the current 'post-accident punishment' to 'pre-accident prevention.' According to the Korea Employers Federation, the punishment level for fatal industrial accidents under the current Industrial Safety and Health Act is already the highest in the world (corporate fines up to 1 billion won, with a 50% increase in prison sentences in case of death). However, as of last year, the number of fatal industrial accident deaths per 10,000 workers was 46, much higher than major countries (USA 37, Japan 16, Germany 15, UK 4). Considering this reality, it is argued that to effectively reduce fatal accidents, industrial accident prevention policies based on expertise and the characteristics of industrial sites must be strengthened.

Kwon Tae-shin, Vice Chairman of the Federation of Korean Industries, said, "Even before reviewing the effects or side effects of the world's toughest industrial safety law, which was implemented in January this year, there is an attempt to create the Serious Accident Act again," adding, "With a series of regulations tightening control over companies recently passed, companies will focus more on labor-management relations and accident prevention rather than bold investments, or eventually move overseas."

9 out of 10 Domestic Companies Oppose the Enactment of the Serious Accident Corporate Punishment Act

According to the 'Corporate Awareness Survey on the Serious Accident Corporate Punishment Act' released by the Korea Employers Federation on the same day, 90.9% of the 654 participating companies responded that they oppose the enactment of the bill.

Furthermore, 95.2% overwhelmingly considered the level of punishment imposed on business owners, management officials, and corporations in the bill to be excessive. When asked whether strengthening punishment is effective in preventing serious accidents, 84.3% of the responding companies answered that the preventive effect is either nonexistent or minimal.

Additionally, companies predicted that SMEs (89.4%) rather than large corporations (7.2%) would be significantly affected by the strengthened punishments. Regarding related impacts, the most common concern among companies was "increased corporate management risk due to the rise in actual imprisonment of business owners and management officials (63.6%)," followed by "contraction of production activities due to excessive fines and administrative sanctions (60.9%)."

Regarding practical improvement measures for preventing serious accidents, 48.8% of the responding companies selected reforming safety systems considering industry characteristics and company size, as well as improving unreasonable overlapping regulations.

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