"If the CEO is absent, work comes to a complete stop"... The fear of the Serious Accident Punishment Act hitting SMEs

8 Days to Serious Accident Punishment Act... Small and Medium Manufacturers 'Restless'
Difficult to Distribute Management Responsibility... "Business Paralysis if CEO Detained"

A small and medium-sized manufacturing factory located in Gimpo, Gyeonggi.
Photo by Lee Jun-hyung

[Asia Economy Reporters Kim Jong-hwa and Lee Jun-hyung] #Rolling specialist company A, located in Hwaseong, Gyeonggi Province, imported a rolling mill produced in the 1960s from the United States this month at a cost of 400 million KRW. Although it was an old rolling mill and required an additional investment of about 300 million KRW for modification, they could no longer postpone equipment automation ahead of the enforcement of the Serious Accidents Punishment Act. Using a new rolling mill could significantly reduce the accident rate, but the price per unit ranges from 10 to 15 billion KRW, making it an unfeasible option. Purchasing a new rolling mill would require investing more than twice last year's sales revenue (approximately 5.5 billion KRW).

As the enforcement of the Serious Accidents Punishment Act approaches, anxiety among small and medium-sized enterprises (SMEs) is growing. Companies are increasing investment in equipment to reduce accident rates but know they cannot meet the conditions specified by law. There are growing calls for the law to be applied in stages according to company size, but since postponing the enforcement date is now impossible, SME representatives are restless. Foundry company B, located in Gimpo, Gyeonggi Province, recently took several measures, including purchasing new protective gear for workers. Beyond that, no effective countermeasures could be found. This was the limit of safety measures that could be reviewed and secured at the SME level.

One reason for the anxiety among SMEs is that, unlike large corporations, it is difficult to distribute management responsibilities. Many SME owners oversee all areas related to business, including production, sales, and marketing. If the CEO is absent due to lawsuits or other reasons, company operations effectively come to a complete halt.

The CEO of SME manufacturer C, located in Gimpo, Gyeonggi Province, said, "If an SME president is detained due to an on-site accident, the entire business essentially stops temporarily," adding, "Root companies that urgently need to survive will go bankrupt if operations stop for even a few months."

Lee Tae-hee, head of the Smart Job Division at the Korea Federation of SMEs, said, "Ahead of the enforcement of the Serious Accidents Punishment Act, even SMEs trying to prepare are at a loss about what and how to prepare," and emphasized, "More concrete government support is urgently needed for SMEs struggling to prepare for and respond to the Serious Accidents Punishment Act."

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