[Desk Column] The Illusion of Fairness

As expected. The self-employed loss compensation system, which had shown disagreements between the ruling party and the government, is progressing rapidly after President Moon Jae-in's directive to review it. The ruling party immediately declared, "We will prepare a legislative roadmap for the ‘Korean-style loss compensation system’," kicking off a speed race. Although the Ministry of Economy and Finance remains hesitant, it is obvious that the process of legalization will soon follow. Opinions such as ‘retroactive application is necessary,’ ‘payment conditions should be based on sales,’ and ‘the Bank of Korea should secure the funds’ do not seem to pose significant problems. If one tries to offer unsolicited advice out of concern for the national treasury, they might be met with the retort, ‘Is it your country?’

The self-employed loss compensation system originated from the ‘fair economy’ policy direction of the Moon Jae-in administration. Since social distancing measures due to the COVID-19 pandemic severely impacted the self-employed, compensating them was seen as the realization of a fair economy. There are not many who object to this.

However, questions remain: ‘Are the self-employed truly the only group suffering?’ and ‘Can fair economy be realized simply by compensating their losses?’ Many salaried workers who pay taxes regularly have also struggled with reduced wages after COVID-19. Quite a few have lost their jobs. If judged by the same standard, shouldn’t their wages and jobs also be compensated to be fair? Then, wouldn’t the legalization of a loss compensation system for them also be necessary? From their perspective, the very idea that compensating the losses of the self-employed will realize a fair economy is nothing but an illusion.

The other controversial issue, the profit-sharing system, is similar. It is promoted with the intention that companies that profited during COVID-19 help those suffering because of the pandemic, but distinguishing between companies that benefited and those that suffered due to COVID-19 is nonsense. Coupang, considered one of the biggest beneficiaries of the COVID-19 impact, has not made a profit even once since 2014. Even last year, when the untact (contactless) trend surged, Coupang is estimated to have recorded an operating loss of about 200 billion won. Baedal Minjok (Baemin) also failed to avoid operating losses. Is it fair to ask companies still in the red to contribute funds just because they benefited from the untact boom?

From the perspective of shareholders, another pillar of companies, fairness is also a matter to consider. Sharing part of the profits that should be received as dividends with unrelated groups directly infringes on shareholders’ interests. Discontent is already emerging among shareholders in the financial sector pressured by politicians. Meanwhile, the Financial Services Commission’s recommendation to keep the dividend payout ratio of bank holding companies and banks below 20% has poured fuel on the fire. Shareholders oppose the Commission’s claim that increasing loss absorption capacity for COVID-19 risk management contradicts the profit-sharing system. Such controversies could escalate into unexpected issues like breach of trust. Haven’t we already paid enough tuition through the Mir Foundation, which was justified by the noble public interest of enhancing the national brand?

The political demand that companies share profits simply because they made profits despite difficult circumstances is unfair. Who will compensate for the losses from large-scale upfront investments made before receiving the current results? At a time when economic recovery is more urgent than ever, this could only dampen corporate investment motivation. Policies that look only at one side without seeing the whole forest cannot realize a fair economy. It is merely the illusion that good policies are fair.

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