"Need to Introduce Collective Agreement System for Equal Negotiations Between Large and Medium-Sized Enterprises"

Korea Federation of SMEs Holds the '2nd Fair Economy Committee' Meeting

[Image source=Yonhap News]

[Asia Economy Reporter Kwak Minjae] The Korea Federation of Small and Medium Business (Kbiz) announced on the 28th that it held the ‘2022 2nd Fair Economy Committee’ at the Kbiz headquarters in Yeouido, Seoul.

The Fair Economy Committee was established in 2021 to improve unfair trade practices between large and small-to-medium enterprises (SMEs) and to devise measures for win-win cooperation.

Attending the committee meeting were co-chairmen ▲ Jeong Hanseong, Chairman of the Korea Fastener Industry Cooperative ▲ Kim Namgeun, Attorney at Law at Wemin Law Firm, as well as ▲ Kim Haksu, Chairman of the Korea Unmanned Security Industry Cooperative ▲ Park Pyeongjae, Chairman of the Korea Surface Treatment Industry Cooperative ▲ Lee Bongui, Professor at Seoul National University ▲ Jeong Sujeong, Research Fellow at the Small and Medium Business Institute, and about 10 other representatives from the SME industry, academia, legal circles, and research sectors.

Attorney Kim Namju of Dodam Law Firm, who presented at the meeting, introduced Japan’s SME cooperative collective bargaining system and related cases. Attorney Kim said, “For Korea to enhance the bargaining power of SMEs, it is necessary to introduce a collective bargaining system for SME cooperatives,” adding, “Furthermore, it is necessary to clarify the criteria for joint actions by SMEs that are exempt from cartel regulations.”

The attendees agreed that institutional improvements to strengthen the negotiation power of SMEs are absolutely necessary. Although Korea currently has regulations excluding cartel application to joint actions by SMEs, these remain at a formal level.

Yang Chanhoe, Head of the Innovation Growth Division at Kbiz, stated, “Giving the weaker SMEs the opportunity to unite and negotiate on equal footing with the stronger large enterprises is essential to achieve a real balance of power and allow market principles to function properly,” and added, “To enable SMEs to negotiate equally in transactions with large companies, the introduction of a collective bargaining system is necessary.”

Chairman Jeong Hanseong emphasized, “Joint responses by SMEs such as joint purchasing and joint sales are inevitable in transactions with large companies,” and stressed, “Joint actions by SMEs that meet conditions such as rationalization of transaction terms and improvement of competitiveness should be exempt from cartel penalties.”