Medical Privatization Tied Up for 12 Years by Seobalbeop... Government "Accepts Request to Exclude Health and Medical Care"

Korea Service Industry Federation 11th Anniversary Ceremony
"If the National Assembly excludes health and medical sectors, the government should also be respected"

The government announced that it may exclude the health and medical sectors from the scope of the Service Industry Development Framework Act (Seobalbeop), which has been stalled due to controversy over medical privatization. After 12 years of drifting since the legislative push in 2011, the government reversed its previous stance to ensure the bill's passage.

Hong Du-seon, Deputy Minister for Economic Policy at the Ministry of Economy and Finance, is delivering a congratulatory speech at the '11th Anniversary Celebration of the Korea Service Industry Federation' held at the National Assembly on the 8th. Photo by Ministry of Economy and Finance

On the 8th, Hong Du-seon, Deputy Minister of Strategy and Finance, attended the ‘11th Anniversary Ceremony of the Korea Service Industry Federation’ held at the National Assembly and stated, “If discussions arise in the National Assembly to exclude major health and medical-related laws such as the Medical Service Act, the Pharmaceutical Affairs Act, and the National Health Insurance Act from the scope of the (Seobalbeop), the government will respect and accept this.”

The Seobalbeop contains the legal basis to support the development of the service industry. Its goal is to establish a basic plan every five years and annual implementation plans to promote regulatory improvements, financial support, workforce and technology training, and tax reductions.

The Seobalbeop was first proposed by the government in 2011 but has yet to pass. Opposition parties and civic groups have opposed it, arguing that it could lead to medical privatization. In particular, there were significant concerns that viewing health and medical services from an industrial perspective and easing related regulations would undermine the public nature of healthcare. Accordingly, the Democratic Party of Korea has proposed an alternative to exclude the health and medical sectors from the Seobalbeop.

Although the government maintained that the Seobalbeop is completely unrelated to medical commercialization and that excluding specific sectors is undesirable, it has now fully accepted the alternative to ensure its passage. Deputy Minister Hong said, “The key issue that had been the biggest obstacle to enacting the Service Industry Development Framework Act has been resolved,” and emphasized, “As countries are competing to foster the service industry and restructure industries, we hope this bill will definitely pass in this National Assembly so that we do not miss the golden time.”

Service Industry Productivity is Half That of Manufacturing... Will the Seobalbeop Pass This Time?

Korea’s service industry has not achieved qualitative growth relative to its economic significance. According to the Ministry of Strategy and Finance, last year the overall growth rate of the service industry was 4.2%, about 1.5 times higher than the total growth rate of 2.6%. A total of 2.53 million new jobs, accounting for 74% of all new jobs, were created in the service sector. In particular, the content industry has a production inducement effect of $510 million and employment inducement of 3,000 people per $100 million in exports.

Nevertheless, the competitiveness of the service industry remains insufficient. In Korea, the proportion of promising knowledge-based industries within the service sector is lower than in major countries. Traditional fields such as food and accommodation remain low value-added industries. The per capita productivity of the service sector was only $66,000 in 2021, about half of the manufacturing sector’s $138,000. The service trade balance is also in deficit.

As a result, successive Deputy Prime Ministers have consistently appealed for the passage of the Seobalbeop. On June 6, Chu Kyung-ho, Deputy Prime Minister and Minister of Strategy and Finance, chaired the ‘Service Industry Development TF Meeting’ and said, “We will expedite the legislative process for the Seobalbeop,” and last month also pledged to work with related industries to pass the bill. Former Deputy Prime Minister Hong Nam-ki also earnestly requested during his tenure in 2021, “I sincerely ask for the passage of the Seobalbeop.” The Seobalbeop is the policy he mentioned as most regrettable not to have passed.

The government explains that the Seobalbeop must be passed to enhance the competitiveness of the service industry. Only with a legally binding basis can systematic support be provided. A Ministry of Strategy and Finance official explained, “(If the Seobalbeop passes) effective policies can be established by sector,” and “It will also enable timely support to strengthen the competitiveness of various service industries that have been in the blind spots of policy support.”

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