[Desk Column] Policy Delicacy Needed for Gugupalpal Small and Medium Enterprises

Kim Min-jin, Head of the Ministry of SMEs and Startups

Presidential candidates are visiting the Korea Federation of SMEs one after another to meet with representatives of small and medium-sized enterprise (SME) organizations. This is a usual occurrence during election periods. While it might be viewed skeptically, there is no need to be overly critical. Let us temporarily set aside judgments about the sincerity of these visits and meetings. If through this process the current issues faced by the SME sector can be properly heard and understood, it is a meaningful occasion. Regardless of who becomes the presidential candidate, what matters is that they fully grasp the difficulties of the SME sector, reflect them in their key pledges, and work to improve and realize them.

At this opportunity, the SME sector is also actively organizing the top 10 pressing issues and delivering them to each candidate’s representatives. The issues identified by the SME sector include: reforming the uniform 52-hour workweek system, improving the minimum wage system, receiving fair prices for supply contracts, enhancing the public procurement system, ensuring fairness in online platform transactions, addressing unfair trade practices, facilitating smooth SME succession, revitalizing cooperative joint projects, supporting the expansion of sales channels for SME products, and establishing a credit evaluation system exclusively for SMEs.

The reforms of the 52-hour workweek and the minimum wage system emerged during the current administration and are among the highest priorities for the SME sector. Their impact is significant. Fairness in online platform transactions is a newly emerging issue due to changes in the economic structure. Issues such as receiving fair prices for supply contracts and improving unfair trade practices are long-standing challenges between large and small enterprises and within the prime-subcontractor structure. Although not included in the list, the issue of carbon neutrality reduction is also a major hurdle for SMEs.

The burdens on SMEs are increasing rapidly while improvements are slow. It is like applying the same rules in a mixed martial arts match to fighters of different weight classes. The problems of the uniform 52-hour workweek system are evident throughout SME production sites. Labor shortages in traditional manufacturing cannot be simply attributed to structural changes in the economic environment or individual company treatment issues. The sharp increase in the minimum wage has dealt a fatal blow to small business owners, rapidly disrupting existing order and structures. To achieve the government’s carbon neutrality goals, companies must endure significant investments and expenses, which are at levels individual SMEs cannot bear.

Many SMEs are struggling due to the current administration’s pro-labor policies, the COVID-19 situation, and changes in the economic structure. It is not acceptable to simply say, “Endure the hardship, follow despite difficulties, accept the pain.” This does not mean abandoning all these efforts. The burdens on individual companies should be reduced while ensuring that work can proceed as smoothly as possible. The world today is not the old military where you must obey orders without question.

We often describe SMEs as the capillaries of the economy. SMEs account for 99.9% of all domestic companies, and 88% of all workers (83.1% according to the most recent 2020 SME basic statistics) work in SMEs ? the term “99-88” is even found in Korean dictionaries. They must be nurtured appropriately and supported with delicate policies so they can maintain their competitiveness. Policies must be established that fit the realities of SMEs.

This is not only for the benefit of SME owners. The polarization between large and small enterprises is essentially the polarization of society itself. Since companies responsible for 83% of total employment must operate well for the lives of the people to be comfortable.