What Do You Think About the 'Profit Sharing System' Proposed by Representative Lee Nak-yeon?

Democratic Party Establishes COVID Inequality Task Force
People Power Party Criticizes as "Twisting People's Arms," Calls It "Unconstitutional Idea"
Justice Party Advocates for "Special Disaster Solidarity Tax"
Experts Say "Profit-Sharing System Unlikely to Significantly Reduce Polarization"

Lee Nak-yeon, Leader of the Democratic Party of Korea./Photo by Yoon Dong-ju doso7@

[Asia Economy Reporter Kang Juhee] Lee Nak-yeon, leader of the Democratic Party of Korea, proposed a 'profit-sharing system' to resolve the economic inequality deepened by the COVID-19 pandemic. However, voices of criticism such as 'twisting the arms of companies' and 'violation of market principles' are rising both inside and outside the political circle.

Experts predict that the profit-sharing system will not have a significant effect in solving the problem of economic polarization.

On the 11th, at the party's Supreme Council meeting, Lee said, "A K-shaped polarization is emerging where the income of high-income groups increases while the income of low-income groups rather decreases," and added, "Our society should also discuss various ways in which sectors or groups that have gained significant profits from COVID-19 contribute part of their profits to help those who have suffered greatly."

The intention is to share the profits earned by companies that benefited from COVID-19 to prevent economic polarization. However, Lee set the premise for the feasibility of the profit-sharing system as 'voluntary participation by the private sector.'

Companies expected to share profits include large corporations like Samsung and LG, which enjoyed a boom in semiconductors and home appliances, as well as portal companies such as Naver and Kakao, game companies, and platform companies like delivery apps that benefited from the rise of non-face-to-face services.

The Democratic Party announced on the 12th that it would establish a 'Post-COVID Inequality Resolution and Fiscal Policy Task Force (TF)' and begin full-scale consideration of introducing the profit-sharing system. Hong Ik-pyo, the chairman of the Policy Committee, will lead the TF.

At the Supreme Council meeting that day, Hong said, "A bold effort is needed to break the formula that crises expand inequality," and added, "Rather than coercive measures, we can prepare voluntary participation plans based on the spirit of solidarity and cooperation for community recovery, which can induce a virtuous cycle of growth and distribution."

Lee Nak-yeon, leader of the Democratic Party of Korea, and Yang Hyang-ja, Supreme Council member, are attending the Supreme Council meeting held at the National Assembly on the 11th. Photo by Yoon Dong-joo doso7@

Opinions are divided in the political circle regarding the profit-sharing system. The People Power Party strongly opposed it, calling it 'twisting the arms of companies.'

On the 12th, Joo Ho-young, floor leader of the People Power Party, said at the National Assembly's 3rd Ontact (non-face-to-face online contact) policy workshop, "Jobs should be created by companies and the private sector, but various regulations are tying their hands and feet, and now they want to go further with the profit-sharing system," criticizing, "They are twisting the arms of economic agents to even reclaim profits."

On the same day, Kim Eun-hye, spokesperson for the party, issued a statement saying, "If you want to share profits, the order is to first share the profits taken by the Moon Jae-in administration," and criticized, "I am speechless at the ruling party leader's unconstitutional idea of confiscating the property of citizens who have only quietly worked hard to fill the depleted national treasury. There is nothing to say about the ruling party leader's 'take it or leave it' style remarks."

On the other hand, the Justice Party criticized the Democratic Party's call for voluntary participation by companies as "irresponsible" and argued that a 'special disaster solidarity tax' should be introduced for temporary taxation.

Jang Hye-young, floor spokesperson, said at a National Assembly briefing that day, "Leader Lee's suggestion to introduce the COVID profit-sharing system through 'voluntary participation' is truly irresponsible," and pointed out, "The good landlord policy did almost nothing to help self-employed small business owners who suffer from rent burdens."

She added, "What the government and ruling party should do now is not to rely on the goodwill of the people but to institutionalize social solidarity," and proposed, "Let's fully discuss legislation for the introduction of the special disaster solidarity tax at the National Assembly in February."

Lee Nak-yeon, leader of the Democratic Party of Korea, is attending the Supreme Council meeting held at the National Assembly in December last year, delivering an opening remark. Photo by Yoon Dong-joo doso7@

Some members of the Democratic Party also expressed skeptical responses to the profit-sharing system. On the 13th, Representative Lee Sang-min wrote on his Facebook, "I agree with the intention, but 'voluntary participation' does not guarantee effectiveness. There is also a risk of pressure or state-controlled donations," and argued, "It is more appropriate to take a straightforward approach such as a 'wealth tax' or 'social solidarity tax.'

Representative Lee Yong-woo also wrote on Facebook on the 12th, "Although voluntariness is emphasized in the profit-sharing system, it is doubtful whether it will actually happen and only controversy will increase," and said, "I propose a framework for creating a social solidarity fund."

Experts predict that the profit-sharing system will not have a significant effect in solving the polarization problem.

Professor Kim Tae-gi of Dankook University's Department of Economics said, "The profit-sharing system has been implemented in the past but did not show significant effects," and criticized, "To resolve polarization, the government's mindset itself must change. It is almost a bullying policy in a situation where corporate taxes are raised and all kinds of regulations that hinder corporate activities are created."

He continued, "The key to addressing polarization is to enable labor mobility," and suggested, "The group most severely affected by COVID-19 now is the youth. Currently, new industries need labor, so their labor force should be able to move to industries such as semiconductors, bio, and renewable energy."

Professor Kim pointed out, "Although the government claims to act for the citizens, many citizens respond cynically as government policies repeatedly fail," and said, "Increasing jobs for the youth is the way to resolve polarization. If regulations on companies become severe, hiring opportunities will further decrease."

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