[Exclusive] Heads of 5 Economic Organizations to Meet Hong Nam-gi Next Week... Will They Request Pardon for Lee Jae-yong?

Quarterly Regularization of 'Government-Business Communication'... Economic Five-Group Leaders Meeting Scheduled Next Week

[Image source=Yonhap News]

[Asia Economy reporters Jang Se-hee and Kim Heung-soon] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, will meet with the heads of the five major economic organizations next week. Although he has emphasized communication to the extent of holding three meetings this year alone, there are criticisms that these meetings are merely "formal occasions" as he remains silent on actual corporate demands.

On the 5th, a government official stated, "Deputy Prime Minister Hong plans to meet with businesspeople struggling due to COVID-19 to listen to their difficulties on the ground," adding, "There are plans to regularize communication on a quarterly basis." He also added, "Currently, we are coordinating participants and discussion topics for next week's schedule."

The meeting is expected to be attended by the heads of the five major economic organizations: Chey Tae-won, Chairman of the Korea Chamber of Commerce and Industry; Sohn Kyung-shik, Chairman of the Korea Employers Federation; Koo Ja-yeol, Chairman of the Korea International Trade Association; Kim Ki-moon, Chairman of the Korea Federation of SMEs; and Kang Ho-gap, Chairman of the Korea Federation of Medium-sized Enterprises. The government views this as significant as it is the first event to regularize communication since the meeting in April.

The major economic organization heads are expected to repeatedly request a pardon for Vice Chairman Lee. At the April meeting, Chairman Sohn also requested a pardon for Vice Chairman Lee, and other economic organizations supported this. The pardon request arose during discussions concerning concerns over the global semiconductor hegemony battle.

With no consideration given to lowering corporate tax and inheritance tax rates or easing requirements for business succession deductions, coupled with a sharp increase in the minimum wage, the business environment has worsened further. When Hong Nam-ki took office in 2018, he stated, "We will actively supplement some policies that progressed faster than market expectations, such as the minimum wage," but the minimum wage increased by double digits?16.4% in 2018 and 10.9% in 2019 compared to the previous year. Next year's minimum wage will also rise by 5.1%.

Amendments to the Labor Union Act, the 52-hour workweek, and the Serious Accident Punishment Act are also hampering business management. A business community official said, "The newly introduced regulations are 'megaton-class' that can worsen labor-management relations or impose significant burdens on management," adding, "Labor-centered voices are relatively well accepted, while management demands are only partially reflected in areas like export or tax support, which are relatively minor, so from the corporate perspective, these are effectively stricter regulations."

Kim Yong-chun, head of the Employment Policy Team at the Korea Economic Research Institute, said, "Since the opinions presented by the business community have hardly been accepted so far, even during meetings or surveys, businesspeople do not express honest opinions or become discouraged, leading to low morale," emphasizing, "There needs to be a major policy shift that breathes vitality into companies rather than just formal meetings."

The Investment and Win-Win Cooperation Promotion Tax System (Win-Win Cooperation Tax) is also cited as an example of ignoring the voices of large corporations. The government designed it with the intention that large companies share their profits with small and medium-sized partner companies, requiring companies to increase investment, wages, and win-win support proportionally to their net profits. If desirable expenditures are deemed insufficient, a weighting of 1 to 3 is applied. Regarding this, Choi Jun-seon, Professor Emeritus at Sungkyunkwan University, pointed out, "Retained earnings are assets remaining after paying taxes, and classifying 60-80% of current income not reinvested in investment or wages as non-reinvested income and taxing it at 20% constitutes clear double taxation."

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