SMEs Say Labor Regulations Are Most Burdensome... Employment Expansion Expected if Regulations Improve

Korea Federation of SMEs Releases Survey on Regulatory Challenges
44% of SMEs Say "Current Regulatory Level Is High"
Low Expectations Prevail for Government's Regulatory Reform Efforts

Four out of ten small and medium-sized enterprises (SMEs) in Korea feel that the country's regulatory environment is stringent, with labor-related regulations cited as the most burdensome.

On November 26, the Korea Federation of SMEs announced the results of a survey on regulatory difficulties, conducted with 300 SMEs.

According to the survey, 43.7% of SMEs assessed the current level of regulation as "high," significantly exceeding the 10.0% who considered it "low." Regarding the impact of regulations on business competitiveness, 48.3% of respondents said the effect was "negative," while only 7.0% viewed it as "positive."

Results of the "Regulatory Difficulty Survey for Small and Medium Enterprises" conducted by the Korea Federation of Small and Medium Business. Korea Federation of Small and Medium Business

Among the companies that said regulations negatively impact their competitiveness, the most frequently cited reasons were restrictions on employment growth (29.7%) and increased costs and decreased price competitiveness (29.0%). Other reasons included decreased productivity (15.2%), limitations on entering or developing new businesses and technologies (11.0%), and reduced or delayed investment (9.0%).

When asked about the most burdensome types of regulations, "labor regulations" topped the list at 38.0%. This was followed by financial and tax regulations (15.0%), environmental regulations (14.7%), certification and patent regulations (13.3%), and regulations on procurement and bidding participation standards and procedures (10.0%).

Regarding expectations for the government's regulatory reform efforts, 28.0% of respondents said their expectations were "low," slightly higher than the 21.3% who said they were "high."

As for the direction in which the government should prioritize regulatory reform, "continuing regulatory reform efforts until the end of the current administration" was the most common response (24.3%), followed by addressing chronic and socially contentious regulations (22.7%), a comprehensive review and relaxation of existing regulations (19.7%), and encouraging proactive administration by public officials (15.7%).

If regulations are improved, companies plan to expand employment (38.7%), increase technology and research and development (27.0%), boost facility investment (19.0%), and enter new businesses (10.7%), in that order.

Chu Moonkab, Head of Economic Policy at the Korea Federation of SMEs, said, "We hope the current administration will consistently pursue strong regulatory reforms," and added, "The Korea Federation of SMEs will also actively collect feedback from the field and make recommendations to the government and the National Assembly to ensure regulatory reforms that SMEs can truly feel."

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