First State Affairs Council of Ruling, Opposition, and Government: Will They Resolve Challenges on Supplementary Budget, Pension Reform, and Semiconductor Act?

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The State Affairs Council held on February 20, where representatives from the National Assembly, both ruling and opposition parties, and the government come together to address urgent issues, serves as a critical juncture that could determine the fate of grand compromise politics. The main agenda items include the supplementary budget, pension reform, and the Special Semiconductor Act. Although the political landscape is complicated by the variable of impeachment proceedings and conflicting interests among political circles, the prevailing view is that a path toward compromise must be found, especially given the gloomy state of the economy. However, some analysts warn that if political logic intervenes amid the possibility of an early presidential election, reaching an agreement may prove difficult.

On this day at 5 p.m., Choi Sangmok, Acting President and Deputy Prime Minister and Minister of Economy and Finance; Woo Wonshik, Speaker of the National Assembly; Kwon Youngse of the People Power Party Emergency Response Committee; and Lee Jaemyung, leader of the Democratic Party of Korea, will hold the State Affairs Council at the National Assembly. Since the agenda was not finalized during previous working-level meetings, it is expected that the parties will explore a range of issues during this session.

On the 9th, the first working-level consultation of the National Policy Council was held at the National Assembly. Attending the consultation were Lee Haesik, Chief Secretary to the Party Leader of the Democratic Party of Korea; Jin Seongjun, Chairman of the Policy Committee; Jo Oseop, Chief Secretary to the Speaker of the National Assembly; Bang Giseon, Director of the Office for Government Policy Coordination; Kim Sanghun, Chairman of the Policy Committee of the People Power Party; Kang Myunggu, Chief Secretary to the Emergency Committee Chairman; Kim Beomseok, First Vice Minister of the Ministry of Economy and Finance; and Kwak Hyun, Senior Secretary for Political Affairs. Photo by Kim Hyunmin

The supplementary budget is considered the most likely area for agreement. Negotiation became possible when Lee Jaemyung indicated he might be willing to give up the livelihood recovery consumption coupon program. On February 19, Lee stated, "If it turns out the consumption coupons are absolutely unacceptable, why not use the funds to create jobs and support startups instead?" Since the People Power Party has proposed a "targeted supplementary budget" that prioritizes the most urgent needs, there is potential for a dramatic agreement. Jin Seongjun, Chairman of the Democratic Party Policy Committee, said at a policy coordination meeting on the same day, "Given the urgency of livelihoods, we hope the People Power Party will join us in a spirit of broad-mindedness."

Initially, the Democratic Party proposed a supplementary budget totaling 35 trillion won, which included a livelihood recovery consumption coupon program (13 trillion won) that would provide 250,000 won per person to all citizens. The People Power Party, on the other hand, suggested excluding supplementary budget items that could spark political controversy, such as local currency, and instead called for a supplementary budget focused on domestic demand recovery, support for vulnerable groups, and strengthening industrial and trade competitiveness. Kim Sanghun, Chairman of the People Power Party Policy Committee, said on a radio program that while the overall direction of the supplementary budget could be discussed, it would be difficult to reach agreement on the details during today’s meeting.

Discussions on the Special Semiconductor Act have a long way to go. The ruling and opposition parties remain at odds over the key issue of exceptions to the 52-hour workweek. After failing to reach a consensus during the National Assembly's Industry, Trade, Energy, SMEs and Startups Committee's subcommittee on February 17, both sides engaged in a blame game. The People Power Party insists that an exception to the 52-hour workweek for research and development (R&D) personnel is essential. In contrast, the Democratic Party argues that only the agreed-upon provisions-such as tax benefits and subsidies-should be passed first. Another variable is that Lee Jaemyung is scheduled to meet with the leaders of the two major labor unions, who oppose the special exception, on February 21.

Pension reform talks are also at an impasse. While both sides have agreed to raise the insurance premium rate (contributions) to 13%, they have failed to narrow their differences on the income replacement rate (benefits). The People Power Party maintains that the income replacement rate should be linked to structural pension reform, and thus both parametric and structural reforms should be discussed in a special committee with equal representation from both parties. The Democratic Party, on the other hand, insists that parametric reforms should be handled by the Health and Welfare Committee of the National Assembly, and structural reforms should be discussed in the special committee. Other items that may come up for negotiation include amendments to the Commercial Act to impose a fiduciary duty on directors to shareholders, and amendments to the Inheritance Tax Act to expand the exemption threshold.

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