"The Service Industry Accounts for 71% of Employment... Swift Enactment of the Framework Act Needed"

FKI Urges Enactment of the Framework Act on the Development of the Service Industry

Establishing a Rational Policy Support System for the Service Sector

The Federation of Korean Industries (hereinafter referred to as FKI) has called for the establishment of a legal basis to systematically support the service industry, which is leading domestic employment and value-added creation.

On March 16, FKI announced that it had submitted a statement on the “Framework Act on the Development of the Service Industry” to the National Assembly and the government, emphasizing that “the service industry has grown into a core pillar of the economy, accounting for 71.1% of employment and 61.9% of total value-added.” FKI urged the swift enactment of the Framework Act on the Development of the Service Industry (hereinafter referred to as the Service Development Act).

Yonhap News

According to data from the National Data Office, as of 2024, approximately 14.44 million people are employed in the service sector in Korea, which is 4.8 times the number of manufacturing workers (3.04 million). However, the labor productivity per worker in the service sector is only 68.9% of the OECD average, leading to calls for government support policies to drive productivity innovation.

Currently, the manufacturing sector is supported by comprehensive legislation (such as the National Advanced Strategic Industries Act and the Special Act on Materials, Parts and Equipment), making it easier to design and link policy support as a package. In contrast, the service industry is centered around individual laws (such as the Tourism Promotion Act, the Content Industry Promotion Act, and the Software Promotion Act), which results in fragmented support and potential blind spots.

FKI explained, “Recently, rising labor costs and the growing burden of fixed expenses have been undermining the investment capacity of service companies. If the Service Development Act is enacted to provide an institutional foundation, it is expected to enhance companies’ investment capacity, leading to a virtuous cycle of increased employment and service innovation.”

Over the past three years, Korea’s service exports have remained at an annual average of 120 to 130 billion dollars, accounting for around 16% of total exports and ranking between 16th and 18th worldwide. As Korea possesses competitiveness in various fields such as digital and content, the establishment of a comprehensive development strategy and policy coordination system is expected to foster both qualitative and quantitative growth in service exports.

Currently, four bills on the Framework Act on the Development of the Service Industry are pending in the 22nd National Assembly. The common features of these four bills include: ▲ the establishment of a joint public-private chair committee, ▲ the formulation and implementation of a basic plan every five years, ▲ overseas expansion, and ▲ the establishment and designation of research and statistics specialist centers.

FKI also expects that, if mechanisms such as a “conflict mediation organization” are institutionalized during the enactment of the Service Development Act, disputes will be resolved through formal procedures rather than public opinion campaigns. This will reduce business uncertainty, strengthen sustainability, and create a virtuous cycle for the development of the service industry.

Kwon Hyukmin, Head of Growth Strategy at FKI, emphasized, “Strengthening the competitiveness of the service industry is an essential precondition for our economy to advance into the era of a national income of 40,000 dollars. It is urgent to improve the current industrial policy framework and establish a balanced institutional basis that encompasses the entire service sector.”

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