KDI "Welfare Spending Should Be Selective... Need to Establish Korean-Style Corporate Governance"

[Image source=Yonhap News]

[Asia Economy Reporter Kim Eunbyeol] The Korea Development Institute (KDI) stated on the 17th that "welfare expenditures for social protection and economic stabilization should be as selective and temporary as possible, while expenditures aimed at enhancing the productive capacity of economic agents and social integration need to be provided universally."

On the same day, Lee Taeseok, a KDI research fellow, argued at the 'KDI 50th Anniversary International Conference' held at the Four Seasons Hotel in Seoul that "criteria for selective support and universal support must be established." He suggested, "Based on the public consensus that as the level of welfare services increases, the burden of taxes and social insurance premiums also rises, it is necessary to devise a fair and sustainable welfare funding plan."

He added, "In the future, a social consensus should be reached on the total burden level that society can bear and the principle of fair distribution."

In an additional presentation that day, KDI pointed out the need to create a Korean-style corporate governance system that combines the advantages of professional management with the owner (head) ownership management of domestic large corporations. Owner ownership management allows for swift decision-making and a sense of ownership but makes it difficult to verify the successor's capabilities and carries the risk of arbitrary decisions and abuse of management rights. Professional management enhances corporate transparency by allowing verified managers to demonstrate expertise but tends to delay decision-making speed and focus on short-term goal achievement. Therefore, it is suggested that establishing a 'Korean-style corporate governance' can solve these problems.

In particular, it was viewed that systems should be improved to activate minority shareholders' participation in general meetings through electronic voting, shareholder derivative lawsuits, and separate election of audit committee members, thereby more effectively checking the owner's arbitrary management. Additionally, it was argued that while not stifling normal market transactions, the standard rate for imposing fines should be raised, and punitive damages should be expanded.

From the perspective of regulatory reform, it was diagnosed that entry barriers in specialized qualification markets such as finance and healthcare need to be lowered.

Especially, KDI proposed that healthcare industry regulations should swiftly shift to a negative system, which is a 'principle of allowance and prohibition of exceptions' approach, for businesses not directly related to health.

Deputy Prime Minister and Minister of Economy and Finance Hong Namgi said in his congratulatory speech that "for the Korean economy to leap forward as a leading economy, securing growth engines responsible for the next 50 years is urgent, and while responding to structural changes, it is necessary to strengthen inclusiveness toward sustainable growth." KDI President Choi Jeongpyo stated in his opening remarks, "I hope the contents of this announcement will help overcome the difficulties Korea will face in the mid to long term."

The conference was attended by KDI researchers and officials from the Organisation for Economic Co-operation and Development (OECD), among other domestic and international researchers, who discussed economic directions in sectors such as industry, labor, and finance under the theme 'What's Next? Future Challenges of the Korean Economy as Seen by KDI.'

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