[Turning Point for Yoon] ⑤ 'Four Major Reforms' Hampered by National Assembly... Also Facing Risks from Trump

Legislative-Executive Conflict, Consultative Body Launched but No Solution Found
Pension Reform Stalled at National Assembly Threshold
Education Reform Requires Fundamental Changes Including Admission System Overhaul
Concerns Over Aftermath of Trump’s Possible Re-election

On the 10th, marking the halfway point of its term, the Yoon Seok-yeol administration is accelerating its '4+1' reforms, which include labor, pension, education, and medical reforms, along with measures to address low birth rates. This urgency stems from a sense of crisis that if comprehensive structural reforms across society are not undertaken in the face of low birth rates and aging population, South Korea's future will inevitably be bleak.

However, conflicts between the government and medical professionals have failed to find a resolution for several months. Pension reform is also a major obstacle to reform due to slow parliamentary cooperation amid confrontation between ruling and opposition parties. The diplomatic and security sectors are also facing urgent challenges. Security threats have intensified due to North Korea's deployment of troops to Russia, and risks have increased both domestically and internationally with the potential re-election of former U.S. President Donald Trump, who prioritizes his country's interests.

First, medical reform, led by the expansion of medical school quotas, was the task on which the Yoon administration concentrated its efforts the most. As the medical gap between local areas and the metropolitan area widened and the crisis in regional and essential medical services deepened due to the concentration on non-essential medical care, the government pushed for an increase in medical school quotas, expanding the number of medical school seats for the first time in 27 years. However, the medical community fiercely resisted. Although it was confirmed to increase medical school quotas by 1,507 next year, collective opposition from residents and medical students has prolonged the conflict between the government and medical professionals. A bipartisan consultative body to resolve the situation is about to launch with difficulty, but it is already faltering as the opposition party and resident groups have withdrawn.

Professor Ha Jun-kyung of Hanyang University said, "Even if the direction is right, political capability to coordinate policies as much as possible is needed when encountering groups with conflicting interests during the reform process, and the budget must also support it. If the public who initially supported the increase in medical school quotas withdrew their support during the policy implementation process, it is necessary to reflect on whether there were problems in that process and supplement the policy to regain the driving force for reform."

Pension Reform Proposal Presented but Stalled by Partisan Conflict

President Yoon Suk-yeol is answering questions during the 'National Address and Press Conference' held at the briefing room of the Presidential Office building in Yongsan, Seoul, on the morning of the 7th. Photo by Yonhap News

Pension reform is also fraught with difficulties. President Yoon identified pension reform as a long-term project from the early days of his term and prepared a unified government plan. In January last year, the fifth financial projection concluded that the fund would be depleted by 2056. By October of the same year, the government submitted 5,600 pages of projection data to the National Assembly, including public and basic pensions, retirement pensions, occupational pensions for public officials, military personnel, and private school teachers, their complementarity, public opinion surveys, focus group interviews (FGI), and actuarial analyses to enhance long-term fiscal stability amid demographic changes. In September this year, based on this, a single reform plan was announced that automatically adjusts pension benefits according to population changes, based on an increase in contribution rates (from 9% to 13%) and income replacement rates (from 40% to 42%).

However, discussions on pensions between the ruling and opposition parties in the 22nd National Assembly have come to a halt due to disagreements over the income replacement rate. While there was consensus on raising the contribution rate to 13%, there was disagreement over whether to maintain the income replacement rate at 42% or raise it to 45% (as proposed by the Democratic Party). Moreover, the Democratic Party has criticized the government for biased public opinion surveys and the reversal phenomenon related to contribution rate increases by generation.

In politics, the first half of next year is seen as a golden time for bipartisan negotiations on pension reform. With the 2026 nationwide local elections, the 2027 presidential election, and the 2028 general parliamentary elections approaching consecutively, there is little time left to focus on reform tasks without election distractions.

Professor Seok Jae-eun of Hallym University’s Department of Social Welfare said, "At least the increase in contribution rates should be achieved within this year," adding, "Controversial issues such as balance with other pensions and automatic stabilization mechanisms can be addressed together with the income replacement rate reform by both parties." Professor Seok emphasized, "Other OECD countries have already raised contribution rates, and South Korea is among the latest. If this is not achieved this time, it would be a historic failure."

Labor Hours and Retirement Age Extension Discussions Stalled

The first area President Yoon tackled early in his administration was labor. In May 2022, he responded uncompromisingly to illegal strikes involving violence by the Cargo Truckers Solidarity Union and the occupation by subcontracted workers at Daewoo Shipbuilding & Marine Engineering, gaining public support.

Subsequently, the Presidential Office and government swiftly addressed labor sector malpractices traditionally accepted as norms by establishing labor law supremacy, abolishing unfair hiring practices such as employment inheritance, increasing transparency in union accounting, and correcting interference with withdrawal from industrial unions. Last year, 267 workplaces with a high likelihood of labor disputes were designated as vulnerable and core workplaces and managed accordingly, with labor inspectors dispatched to support negotiations at each site. Additionally, to crack down on wage arrears, prosecution investigations were strengthened, increasing penalties for employers with high and habitual wage arrears.

As a result, the Yoon administration reduced lost workdays and dispute duration to about one-third of previous governments’ levels. In particular, the duration of disputes decreased from 23 days in 2021 to 9 days last year. However, discussions on major issues such as flexible working hours, postponed due to the early controversy over 69-hour workweeks, and retirement age extension due to increasing average age remain sluggish. The prolonged partisan conflict over amendments to Articles 2 and 3 of the Labor Union Act (Yellow Envelope Act) and the appointment of Kim Moon-soo as Minister of Employment and Labor have gradually eroded the momentum of Yoon’s labor reforms. Although discussions continue at the Economic, Social and Labor Council on continuous employment, progress is below expectations. Nevertheless, President Yoon expressed his determination at a press conference on the 7th, stating, "We will create a flexible and vibrant labor market based on the foundation of law and order."

Professor Yoon Dong-yeol of Konkuk University’s Department of Business Administration pointed out regarding the Yoon administration’s efforts to resolve the dual structure of the labor market, "We need to address issues such as strengthening the principle of equal pay for equal work, wage and labor differences between regular and non-regular workers, and the gender wage gap." While acknowledging the need for labor flexibility, Professor Yoon suggested, "Along with labor flexibility, opportunities such as education for reemployment should be increased considering stability."

The priority policy of the Yoon administration’s education reform is the 'Neulbom School.' Neulbom School, which integrates 'after-school' and 'care' services, was implemented for first graders in elementary school this year and will expand participation to second graders next year. Some argue that while expanding Neulbom School is important, it is only a small piece of the larger puzzle of education reform, and more fundamental reforms are needed. These include reconsidering entrance exam systems to reduce private education expenses and excessive competition, as well as university restructuring.

"Prepare for Trump-Driven Risks... Must Exercise Negotiation Power"

Yonhap News

Another task that President Yoon is particularly focused on is responding to low birth rates. In June, President Yoon officially declared a 'national population emergency' and pledged to devote all efforts to addressing low birth rates. In July, the Presidential Office established the Low Birth Rate Response Chief Secretariat to oversee policies related to low birth rates. Fortunately, in August, the number of births increased by 5.9% compared to the same month last year, and the number of marriages rose by 20%, signaling a rebound in birth rates. Professor Han Jong-seok of Dongguk University said, "Policies for work-family balance are gradually showing effects, but they are still insufficient," adding, "The Population Strategy Planning Department, the control tower for population strategy, should be launched promptly, and active cooperation from the opposition parties is needed."

In the diplomatic field, a nuclear storm driven by Trump awaits. Trump, who called South Korea a 'Money Machine,' may demand revisions to the Korea-U.S. Special Measures Agreement (SMA) that determines the scale of defense cost-sharing. If renegotiations on defense cost-sharing do not proceed smoothly, discord in North Korea cooperation may arise, and cracks could appear in the firmly established Korea-U.S. alliance. Professor Ha said, "Trump prefers one-on-one direct deals and prioritizes U.S. national interests over universal order," adding, "It is important to adapt to this style and leverage our technological capabilities as bargaining chips to exercise negotiation power in a win-win direction."