Deaf to Criticism and Building Regulatory Walls, the Giant Ruling Party... Companies Silent Before the Cliff of Hope

Unilateral Passage of Fair Economy 3 Laws... Lobbying Functions Paralyzed
Companies Shrink Back to Avoid Backlash Ahead of Serious Accident Punishment Act
Communication and Persuasion Abandoned as Opinions Are Ignored
Concerns Over Increased Political Risks and Declining Policy Predictability

On the 22nd, Son Kyung-sik, Chairman of the Korea Employers Federation, is speaking at the 'Economic Organizations' Announcement to Suspend Legislation of the Serious Accidents Punishment Act' held at the Korea Federation of Small and Medium Business in Yeouido, Seoul. Photo by Kang Jin-hyung aymsdream@

[Sejong=Asia Economy Reporter Kim Hyunjung] # A, who is in charge of government relations for a startup currently in the spotlight, intended to inquire about amendments to current laws with the relevant government department but soon gave up. Instead, A personally asked a contact at the Office for Government Policy Coordination to take a first look at the difficulties faced by the company. Watching the process of anti-business legislation such as the Fair Economy Three Acts being pushed through, A was deeply concerned about being labeled as 'unwelcome' for speaking up. A lamented, "Companies are truly in a desperate situation."

As the National Assembly prepares to pass the Serious Accidents Punishment Act, companies that had been demanding a halt to legislation are gradually falling silent. The ruling party's repeated unilateral moves have made it difficult for companies to actively express their opinions. Especially following the one-sided passage of the Fair Economy Three Acts (Commercial Act, Fair Trade Act, and Financial Group Supervision Act), companies have closed their mouths and given up on communication. Some point out that the growing political risk reduces policy predictability, which could lead to a decline in national competitiveness from a business environment perspective.

According to statements from business circles and government officials on the 28th, it is no exaggeration to say that the government relations function of domestic companies, which conveys field voices during the legislative process of the government and National Assembly, is paralyzed. Industry insiders commonly explain that after repeatedly expressing market opinions and positions without them being reflected, companies have effectively reached a stage of resignation. A director in charge of government relations for one of the top 30 conglomerates said, "Typically, legislation is promoted with similar proportions by the executive and legislative branches, but under the current administration, the National Assembly is leading," adding, "However, it feels like the opinion-gathering process has been skipped."

◆Ruling Party Deaf to Voices... "Persuasion? Even Conveying Is Difficult"= Not only medium and large enterprises but also major economic organizations have given up on expectations for communication and persuasion. Park Yongman, chairman of the Korea Chamber of Commerce and Industry, publicly expressed dissatisfaction with the National Assembly's passage of the Fair Economy Three Acts during a recent year-end interview with reporters, which aligns with this context. Chairman Park said, "I feel powerless when laws that ease regulations are not passed, but burdensome bills for companies are quickly pushed through," and added, "Regarding the Economic Three Acts, I was very disappointed not only with the content but also with the legislative process." He particularly noted, "They promised to reflect some anticipated side effects and held public hearings and discussions, but the legislative outcome did not reflect that," and questioned, "Did it have to be handled like a political bill?"

Another executive in charge of government relations in the business community said, "The government relations organization of the Federation of Korean Industries used to be powerful in the business world, but recently it feels almost disbanded," and added, "The voice of the Korea Employers Federation is like an egg hitting a rock." He continued, "Legislation should be balanced by advice from the market and opposition parties, but recently it ends in one shot led by the ruling party."

[Image source=Yonhap News]

◆Political Risk Reduces Predictability... Concerns Over Declining National Competitiveness= The problem is that if this trend continues, the communication link between the government and companies could be completely severed. Especially since the Korean New Deal, a key government initiative, requires significant private sector involvement, and companies' role as an employment buffer during the COVID-19 pandemic is critical, the side effects could be severe. If worsening policy predictability leads to deteriorating business conditions, it could result in reduced investment from foreign companies, and the government's strategy to attract returning companies (U-turn companies) would remain mere rhetoric.

Professor Lee Kyungmook of Seoul National University's Business School emphasized, "Policy makers tend to think only about the benefits of a particular policy, but costs must be considered through the voices of companies." He added, "Looking at the Serious Accidents Punishment Act, the ruling party expects it to simply reduce accidents, but the negative effects such as reduced corporate vitality and relocation of manufacturing plants overseas must be accurately measured and alternatives developed together."

Professor Cho Donggeun, emeritus professor of economics at Myongji University, also stressed, "Policy making without gathering opinions should consider what kind of boomerang effect it might have later," and said, "Since the livestock traceability system has been established, a mechanism to hold responsibility for policy side effects needs to be set up." Professor Cho criticized, "The ruling party is rushing ahead with numbers (seats), but laws are not made by majority vote alone," and described the recent actions of the ruling party as "like water off a duck's back."

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