Policy Impact from Opposition's Landslide Victory
"Few Economic Experts Among April 10 Winners"
With the Democratic Party of Korea achieving a landslide victory in the April 10 general election, changes in the political landscape have become inevitable. Law firms, which need to consider the ripple effects from the perspective of companies most sensitive to the impact on industry, are also bustling. Immediately after the election results were announced on the 11th, the law firms Bae, Kim & Lee LLC, Sejong, and Yulchon each released reports analyzing the election outcomes.
In its report titled “Analysis of the General Election Results and Policy Outlook in Key Areas,” Bae, Kim & Lee LLC stated regarding the legislative direction in the labor sector, “This was the issue with the greatest difference in stance between the ruling and opposition parties among the election pledges,” and added, “Legislative efforts are expected to proceed based on the basic positions and pledges of the opposition coalition for parts that can be pursued through legal amendments.”
It identified key labor legislative policy issues as the introduction of a “4 (4.5)-day workweek,” “prohibition of the comprehensive wage system explicitly stated in the Labor Standards Act,” “re-promotion of the Yellow Envelope Act legislation and expansion of the Serious Accident Corporate Punishment Act,” and “gradual implementation of a nationwide industrial accident insurance system.”
Sejong, in its report “The 22nd National Assembly Election: Results and Impact,” described the foreign policy section, stating, “Since the current government’s inauguration, Korea-Japan diplomatic and trade relations have entered a new phase, but the Democratic Party of Korea, which maintains a tough stance on Japan, is expected to respond actively to Japan-related issues,” and added, “Companies or industry workers closely connected to Korea-Japan relations need to carefully monitor the National Assembly’s legislation and related policies of each negotiation group regarding foreign policy.”
Yulchon, in its report “Policy Direction and Legislative Environment After the General Election,” analyzed, “The contentious bills proposed by the opposition coalition are unlikely to be immediately realized as actual policy legislation,” and “The opposition may unilaterally propose and pass contentious bills through the fast-track process, and the president may exercise the veto power, repeating the confrontation pattern of the past two years.”
Within the law firm industry, economic policies such as the “Financial Investment Income Tax (FIIT)” and “Real Estate Project Financing (PF)” are being highlighted. President Yoon officially announced at the stock market opening ceremony in January that he would “pursue the abolition of the FIIT.” However, some opposition members have expressed negative views citing reasons such as tax cuts favoring the wealthy and reduced tax revenue, making government policy direction on FIIT abolition dependent on opposition cooperation.
Meanwhile, there are also expectations that the issue of non-performing real estate PF, with increasing unsold housing inventory, will become a trigger in economic policy. Until now, the government has been purchasing land for construction company PF projects through the Korea Land and Housing Corporation (LH), but with the opposition holding a majority of seats, there is a possibility of policy direction being halted.
A lawyer from a major law firm said, “There are few economic experts among the newly elected lawmakers in this general election,” adding, “With the lack of clarity in economic policy, companies find it harder to grasp the policy direction. As a result, advisory requests from companies are expected to increase.”
Lim Hyun-kyung, Legal Times Reporter
※This article is based on content supplied by Law Times.
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