[Survey of Top 1000 Companies] Regulatory Reform Satisfaction Score 70.8 "A Long Way to Go"

Asia Economy-Korea Employers Federation Joint Survey
Only 1 in 10 Respondents Satisfied with Regulatory Reform
Impact of New Regulations Including Serious Accident Punishment Act

Need to Directly Reflect Voices from Industrial Sites
1 in 3 Companies Demand Public-Private Collaboration

[Asia Economy reporters Choi Dae-yeol and Jung Dong-hoon] "The 'same person' regulation, applied for over 30 years to suppress economic power concentration, has become a 'Galapagos-style regulation' that fails to reflect the changing times." (June 13, '2nd Seminar on Reforming Corporate Group Legislation and Policy,' Shin Hyun-yoon, President of the Korea Fair Competition Federation)

Unlike the Moon Jae-in administration, which imposed regulations that tightened control over companies with the political belief that 'large corporations = deep-rooted evils,' the Yoon Suk-yeol government has promised to remove the 'sandbags' on companies to drive private-led growth. Although it has declared a pro-business stance, companies still feel uneasy. This is because there are many hurdles to overcome, such as the National Assembly, before outdated regulations that are out of step with global standards and hinder companies can be abolished or eased.

Representative examples include the Serious Accident Punishment Act, the 'same person' clause under the Fair Trade Act, and the 3% voting rights limit for major shareholders. Not only the business community but also voices from emerging industries and services emphasize the need for nurturing, yet companies continue to suffer under these restrictive regulations.

"Only 1 in 10 Satisfied with Regulatory Reform"

70.8 points. This is the average score obtained from a joint survey conducted by Asia Economy and the Federation of Korean Industries targeting the top 1,000 companies by sales on the question of evaluating regulatory reform achievements, marking Asia Economy's 34th anniversary. Only 10.7% answered that they were satisfied with the achievements, while 45.1% were dissatisfied. Those who answered 'average' accounted for 44.2%, roughly similar to the dissatisfied group, but when scoring the achievements, it barely reached an average level.

The rhetoric of boldly eliminating wrong regulations to enhance corporate competitiveness has come from every administration in the past, regardless of ideology or orientation. Conversely, this indicates that regulatory reform is not easy. On the 13th, President Yoon Suk-yeol said, "Regulatory reform is national growth," urging public officials and ministries to accelerate regulatory improvements.

The most frequently cited reason by frontline businesspeople for dissatisfaction with the government's regulatory reform achievements was the 'say one thing, do another' phenomenon, meaning that various corporate regulatory bills have rather been newly introduced. The Serious Accident Punishment Act, which imposes criminal penalties on management executives, is a prime example. While there is consensus on the need to reduce serious accidents among both workers and employers, the act's vague provisions and harsh penalties make it a stringent regulation for CEOs and other management executives. Other major reasons for dissatisfaction include insufficient improvement of core corporate regulations and delays in resolving invisible regulations at the field level.

Yoo Jung-joo, head of the Corporate Policy Team at the Federation of Korean Industries, pointed out, "To carry out regulatory reform, there must be at least a regulatory review mechanism for legislative proposals by lawmakers, similar to government legislation," adding, "There are many demands to resolve even one of the so-called 'chunk regulations' such as the Serious Accident Punishment Act, the 52-hour workweek system, guaranteeing labor dispute rights for non-participating union members, and harsh dismissal regulations for companies." 'Chunk regulations' refer to large-scale regulations overseen by more than one government ministry.

On the first day of the Serious Accidents Punishment Act enforcement, which allows for the punishment of management officials when serious accidents such as worker fatalities occur, managers are conducting a safety inspection at an apartment construction site in Gyeonggi-do on the 27th. Photo by Kim Hyun-min kimhyun81@

Need for Public-Private Consultative Body to Reflect Field Voices

When asked about the direction regulatory reform should take, many pointed out the need to establish a public-private cooperation system to more directly reflect the voices from industrial sites. One in three companies responding to the survey answered this. The Yoon Suk-yeol administration has set 'an economy led by the private sector and supported by the government' as one of its six national goals and, as a means to realize this, the president personally chairs meetings and has formed consultative bodies with active private sector participation. The success or failure of these consultative bodies, which include current businesspeople and retired public officials, is expected to depend on how actively they voice opinions and influence policy decisions.

Additionally, 26.5% of respondents said regulatory reform should be carried out by mediating conflicts among various stakeholders such as workers and the public, while 23.5% supported introducing new systems like a negative regulation system that generally permits new products and services with exceptions for prohibitions, or temporary regulatory easing such as a 'regulatory sandbox.' Some companies also answered that it is necessary to improve the quality of regulations by strengthening reviews from the time regulations are created or to improve public officials' regulatory reform mindset.

Since the new government has declared a proactive stance on regulatory reform, including systems like the negative regulation system, the survey results showed that business executives have expectations for future regulatory reform measures. While 27.5% of companies answered that they do not expect regulatory reform (not at all or not much), 38.3% expressed some level of expectation (somewhat or very much), exceeding the former by more than 10 percentage points.