Meeting between the Ministry of Economy and Finance and the Korea Employers Federation
Deputy Prime Minister for Economic Affairs Choo Kyung-ho is holding a meeting at the Korea Employers Federation in Mapo-gu on the 28th. 2022.6.28 [Photo by Yonhap News]
[Asia Economy Sejong=Reporter Son Seon-hee] Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho said on the 28th, "The chain reaction of competitive price and wage increases riding on the inflationary atmosphere causes a 'vicious cycle of price-wage spiral,' resulting in difficulties for the entire economy and society," urging restraint on excessive wage increases.
Deputy Prime Minister Choo made these remarks during a meeting with Chairman Son Kyung-sik of the Korea Employers Federation (KEF) and other chairpersons at the KEF conference room in Mapo-gu, Seoul.
Choo pointed out, "Recently, a concerning trend of high wage increases has appeared mainly among some IT companies and large corporations, showing signs of spreading to other industries and companies. In particular, so-called successful, financially strong top companies are competitively leading high wage increases under the pretext of performance rewards or talent acquisition." He added, "Excessive wage increases not only exacerbate the high inflation situation but also widen the wage gap between large corporations and small and medium-sized enterprises (SMEs), increasing the relative deprivation of SMEs and vulnerable workers, which may amplify social conflicts."
Choo also said, "Excessive wage increases beyond the productivity of large corporations will expand polarization in the labor market and deepen job mismatches throughout workplaces. Ultimately, companies will find it difficult to maintain competitiveness under such a high-wage, high-cost structure."
However, he noted, "Wages are fundamentally matters to be autonomously decided between labor and management," but asked, "Considering the current difficulties of our economy, the business community should refrain from excessive wage increases, raising wages to an appropriate level within the scope of productivity improvement, and strive to absorb various cost increases through productivity enhancements such as expanded investment."
Regarding regulatory reform, which is of great interest to the business community, Deputy Prime Minister Choo said, "We plan to boldly reform regulations that act like sandbags holding back companies to realize a dynamic economy centered on the private sector." He emphasized, "Except for health and safety regulations, we will mobilize all government capabilities to improve regulations to meet global standards so that our companies can compete confidently with companies worldwide."
He also welcomed recent large-scale investment plans by companies, stating, "To support corporate efforts, we will firmly push forward tax reform, regulatory, and labor market reforms."
KEF Chairman Son Kyung-sik said, "Previous governments also made many efforts for regulatory reform, but sufficient tangible results for companies were not achieved," and requested, "Please take a more active approach to regulatory innovation that makes active corporate management activities difficult."
Regarding labor reform, he emphasized, "The restrictions on dispatch labor, currently limited to 32 industries, should be lifted, and the regulation on the contract period allowed for two years should be relaxed and extended to four years."
Chairman Son also demanded more progressive tax reform plans related to corporations, saying, "To encourage companies to actively invest, more forward-looking tax reform plans should be prepared," including lowering the highest inheritance tax rate.
Regarding the high wage issue mentioned by Deputy Prime Minister Choo, he said, "I agree with the recognition that it accelerates inflation," and added, "We will actively work to resolve this issue."
The meeting was attended by 27 KEF chairpersons, including Chairman Son, Samsung Electronics President Lee In-yong, SK Supex Council SV Chairman Lee Hyung-hee, Hyundai Motor Vice President Jung Sang-bin, LG Corporation President Ha Beom-jong, and Lotte Holdings Vice Chairman Song Yong-duk.
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