Ruling and Opposition Parties Hold State Affairs Council Showdown: Strategic Moves Over Pension Reform, Semiconductor Act, and Extra Budget

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On the afternoon of February 28, the ruling and opposition parties will hold their second State Affairs Council at the National Assembly to discuss key issues such as pension reform and the supplementary budget (extra budget). While the working-level meeting the previous day ended in just 25 minutes with both sides merely confirming their differences and making no progress, there is some speculation that partial progress could be made at today's talks.

According to the National Assembly and the government, Choi Sangmok, Deputy Prime Minister and Acting President as well as Minister of Economy and Finance, Woo Wonshik, Speaker of the National Assembly, Kwon Seongdong, Floor Leader of the People Power Party, and Park Chandae, Floor Leader of the Democratic Party, will hold a four-way State Affairs Council meeting this afternoon. This comes eight days after the first State Affairs Council, which was held on February 20 with Kwon Youngse, Emergency Response Committee Chairman of the People Power Party, and Lee Jaemyung, leader of the Democratic Party, attending instead of the floor leaders.

The main agenda item is pension reform. The ruling and opposition parties have agreed to raise the insurance premium rate-the "money paid in"-from the current 9% to 13%. However, they remain at odds over the income replacement rate-the "money received"-with the People Power Party proposing 43-44% and the Democratic Party insisting on 44-45%. The key issue is whether to introduce an automatic adjustment mechanism that would modify the premium and replacement rates based on demographic and economic conditions.

A government official explained, "Today, we plan to focus discussions on pension reform and the Special Semiconductor Act, as both are urgent. In the case of pension reform, there has been some discussion about introducing an automatic adjustment mechanism, so we hope to make some progress, but it is unlikely to reach a conclusion easily."

People Power Party Emergency Response Committee Chairman Kwon Youngse visited Mico Dongtan 2nd Plant, a ceramic material parts manufacturer in Hwaseong, Gyeonggi-do, on the 28th, and listened to an explanation from Mico CEO Lee Seogyun. Photo by Yonhap News

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The ruling and opposition parties are also far apart on the Special Semiconductor Act. The People Power Party insists on quickly passing the bill, including an exception to the 52-hour workweek rule, while the Democratic Party wants to fast-track a version of the bill without the exception and discuss the 52-hour workweek issue separately.

Kwon Youngse, Emergency Response Committee Chairman of the People Power Party, visited the manufacturing site of Mico, a leading small and medium-sized enterprise specializing in core semiconductor components in Hwaseong, Gyeonggi Province, and stated, "With the recent acceleration of global hegemony competition, Korea's semiconductor industry is facing difficulties. What is even more concerning is that Chinese semiconductor technology has already surpassed ours in certain areas."

This site visit is seen as an effort to counter the arguments of opposition figures such as Lee Jaemyung by engaging directly with field representatives. It is expected that the ruling party leadership will convey to the opposition and the government the need for an exception to the 52-hour workweek rule, as heard from semiconductor company officials during the second State Affairs Council.

The supplementary budget is also a major agenda item. Kwon Seongdong, Floor Leader of the People Power Party, mentioned the need for a supplementary budget during a party strategy meeting this morning, stating, "We will push to provide prepaid cards worth 250,000 to 500,000 won per person to basic livelihood security recipients and the near-poor." This is the second fiscal spending plan, following the announcement on February 24 to provide vouchers worth 1 million won per person to 7 million small business owners.

A government official said, "Both the ruling and opposition parties agree on the need for a supplementary budget, so the debate is more about which items to include, rather than whether to do it or not. The government is cautious, as the proportion of populist items such as consumption coupons could become too large."

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