[Yoon Seok-yeol Elected] Anti-Business Policies to Be Phased Out... Major Changes Expected in Labor Policies (Comprehensive)

Yoon Seok-yeol, 20th President-Elect's Key Industrial Promises "Regulatory Relaxation"
Major Changes Expected in Serious Accident Punishment Act, Minimum Wage System, and 52-Hour Workweek

[Image source=Yonhap News]

[Asia Economy Reporters Oh Hyung-gil, Kim Bo-kyung, Moon Je-won] With Yoon Seok-yeol, the People Power Party candidate, winning the 20th presidential election, significant changes are expected in various corporate policies. As President-elect Yoon has emphasized that "the main driver of economic growth is the private sector, not the government," the business community anticipates the abolition or relaxation of various corporate regulations.

In particular, there is a promise of strengthening support for the semiconductor, battery, and future car industries, expanding the ‘reshoring’ policy that offers tax benefits to companies relocating overseas production facilities back to Korea, and promoting flexibility in the 52-hour workweek system considering small and medium-sized enterprises (SMEs). This signals a sweeping innovation across the entire industrial sector.

According to the business community on the 10th, President-elect Yoon proposed major industrial pledges such as the creation of a ‘50 trillion won + a’ Koma Tech Fund and the development of regional industrial clusters. The Koma Tech Fund is a public-private semiconductor fund, with 50 trillion won from the government and contributions from semiconductor companies, focusing on nurturing fabless and foundry sectors. In response to the global semiconductor hegemony competition, the plan includes expanding tax credits for research and development (R&D) and facility investments, training 100,000 technical personnel, and supporting infrastructure such as power and industrial water to establish Korea as a ‘semiconductor superpower.’

Tax support expansion is also planned for future growth industries such as future cars, secondary batteries, and biotechnology, and government-level investment support is expected to increase in energy sectors including nuclear power, batteries, solar power, and hydrogen technologies.

Expectations for deregulation are particularly high. During the election period, President-elect Yoon promised to immediately abolish about 80 regulations that have restricted corporate activities and to reform the regulatory system with a minimum regulation approach (negative regulation). Although the list of regulations to be abolished has not been disclosed, it is expected to target regulations that economic organizations have pointed out as obstacles to corporate growth and investment activities.

Attention is focused on whether the Serious Accident Punishment Act, which has legal ambiguities, will be improved. In the ‘2022 Corporate Regulation Outlook Survey’ conducted by the Korea Employers Federation, eight industries including semiconductors, steel, shipbuilding and shipping, and construction identified the Serious Accident Punishment Act as the most burdensome regulation. President-elect Yoon also pointed out during the presidential debate that "the detention requirements of the Serious Accident Punishment Act are ambiguous" and that "various legal issues may arise when criminal prosecution is initiated."

[Image source=Yonhap News]

Corporate Policies Likely to Change... Major Shift Expected in Labor Policies

A major overhaul of labor policies is also anticipated. First, a flexible revision of the 52-hour workweek system is expected. President-elect Yoon has repeatedly expressed his intention to supplement the uniform 52-hour workweek system. According to his pledge, startups and similar companies will be included in the special extended working hours category, and the calculation period for working hours will be extended from the current 1-3 months to up to one year. This means companies only need to comply with the 52-hour workweek on an annual average basis, allowing for more flexible work arrangements.

The minimum wage, which has risen significantly over the past five years, is expected to be adjusted with regional and industry-specific differences to increase flexibility. Considering the payment capacity of SMEs, differential application of the minimum wage by region and industry is likely to be reviewed. The introduction of a delivery price linkage system is also anticipated, enabling SMEs to receive fair prices without unilaterally bearing the burden of raw material price increases.

In particular, the next government is highly likely to take a strict stance against illegal acts such as unauthorized workplace occupation and violence by militant labor unions. Additionally, while the labor director system to be introduced in public institutions from July will proceed as planned, the expansion of this system to private companies, which is strongly demanded by labor groups, is expected to face difficulties.