[Chodong Perspective] Good Policy, Bad Timing

From Semiconductors to Shipbuilding, a Crisis on All Fronts
Change Is Needed, but Industry Must Have the Strength to Endure
Recovery Must Come Before Reform

In heart surgery, timing is just as crucial as technique. Making an incision when the pulse is unstable or blood pressure has plummeted can lead to fatal outcomes. No matter how sophisticated the technique, mistimed intervention can threaten a life.

This is the current state of Korean industry. The recent remarks by Prime Minister nominee Kim Minseok, referring to a "second foreign exchange crisis" and a "national crisis that will determine whether we settle as an advanced country or fall behind," are not an exaggeration. Outwardly, order books are being maintained and factories are still running, but internally, the industry is exhausted. Technology has been overtaken, profitability has collapsed, and the foundations of investment and workforce are rapidly crumbling.

The newly inaugurated government is simultaneously pushing forward major reform agendas such as the 4.5-day workweek, mandatory transition to renewable energy, amendments to the Commercial Act, and the Yellow Envelope Law. While there is consensus on the direction of improving labor quality and sustainability, and increasing transparency in corporate governance, whether the industry can withstand the weight of all these changes is a separate issue.

On the shop floors at the core of manufacturing, the 4.5-day workweek leads directly to a sharp increase in labor costs. The transition to renewable energy, coupled with an unstable power grid, heightens production risks. Amendments to the Commercial Act could cause management to focus more on defense than on their main business during the adjustment period. Even if the intentions are legitimate, considering the harsh realities of the industry, concerns about deteriorating performance and management instability are very real. The concerns voiced by those on the ground should not be dismissed as mere opposition to policy. If industry grinds to a halt, so does reform.

The crisis facing our industry is all-encompassing. In semiconductors, our advantage in both advanced processes and design technology is wavering. In shipbuilding, even with a backlog of orders, the lack of skilled workers is raising concerns about delivery delays and penalty payments. Steel and petrochemicals are suffering under the dual pressures of oversupply from China and rising energy costs, while the automotive industry is being shaken by both carbon neutrality regulations and the transition to electric vehicles. The specifics differ by sector, but the common diagnosis is that industrial strength has significantly weakened.

In this situation, if institutional changes come all at once, the industry will be forced to shift from preparing for the future to survival mode. Long-term strategies such as technology investment and global expansion will stall, and companies will focus solely on defensive measures to maintain the status quo. Decision-making focused on short-term stability creates a vicious cycle that further erodes future competitiveness.

A senior business leader commented, "The result of constantly postponing things because they seemed difficult is what we see now." In other words, amendments to the Commercial Act and similar reforms are overdue tasks that can no longer be delayed. However, this too must be based on the premise that the industry can withstand it. To tackle these longstanding challenges, restoring the basic strength of the industry must come first.

No reform can be sustained without first ensuring conditions that the industry can handle. The government must begin by establishing a foundation for industrial recovery. It should restore investment conditions in terms of taxation, finance, and workforce, and implement shock mitigation measures tailored to each sector. At the same time, it must present a transparent schedule for implementing reforms to increase market predictability. Supplementary measures to reduce short-term shocks and ensure a smooth transition are also essential.

Politics is about making decisions, but policy requires meticulous design. Now is not the time to wield the scalpel at the industrial frontlines; it is the time to supply enough oxygen and stop the bleeding so that the industry can endure. Policy is judged not by intention, but by results.