Federation Warns "'Labor Cost Bomb' Inevitable if Basic Law for Working People Is Enacted"

"We Will Launch a Nationwide Petition Campaign"

The Federation of Small and Medium Business called for an immediate halt to discussions on the enactment of the "Basic Law for Workers," warning that excessive labor costs could destroy the ecosystem of small businesses.

Soo-taek Lim, Senior Vice Chairman of the Korea Federation of Small and Medium Business, is reading a resolution opposing the enactment of the "Basic Act on Workers" at the 2026 Korea Federation of Small and Medium Business General Assembly held at the Kensington Hotel in Yeongdeungpo-gu, Seoul on the 27th. Korea Federation of Small and Medium Business

On the 27th, the federation adopted a resolution at the "2026 Federation of Small and Medium Business General Assembly" held at the Kensington Hotel in Yeongdeungpo-gu, Seoul, urging the government and the National Assembly to stop pursuing the enactment of the Basic Law for Workers. The federation also announced its intention to launch a nationwide petition campaign to prevent the bill from passing.

In the resolution released that day, the federation stated, "7.9 million small business owners are already on the verge of closure due to the triple pressures of high inflation, high interest rates, and high labor costs, coupled with sluggish domestic demand. In these circumstances, the Basic Law for Workers being promoted will result in a reduction of employment opportunities in the small business sector and act as a 'job-destruction policy' that will undermine the economic ecosystem."

The federation added, "If the Basic Law for Workers is passed, it will trigger revisions to related laws such as the Labor Standards Act, and the law will pave the way for expanding the application of the Labor Standards Act to workplaces with fewer than five employees."

According to a survey by the federation, if special employment types (such as contract workers) and freelancers are recognized as employees under the law, the additional statutory cost burden for small business owners, calculated only based on the minimum wage, would be approximately 420,000 won per person per month, or 5.05 million won per year. This exceeds 20% of the average annual operating profit (25 million won) of small business owners, based on the 2023 survey by the Ministry of SMEs and Startups.

The federation expressed concern, stating, "If severance pay is also applied on top of this, the burden on small business owners will become unsustainable, ultimately leading to a collapse in local employment and a chain of bankruptcies."

The federation delivered its demands to the ruling party and the government, including: an immediate halt to discussions on the enactment of the Basic Law for Workers; withdrawal of the plan to expand the application of the Labor Standards Act to workplaces with fewer than five employees; and the establishment of effective measures to ease the management burden on small business owners.

The federation also announced that it would launch a nationwide petition campaign opposing the enactment of the Basic Law for Workers, mobilizing its industry and regional organizations for a large-scale signature drive.

Federation President Song Chiyoung stated, "Ironically, a bill intended to protect workers will end up destroying jobs in small businesses and ultimately the livelihoods of ordinary people. By uniting the will of small business owners nationwide, we will launch a nationwide petition against the passage of the bill and mobilize every means available to block its enactment."

This content was produced with the assistance of AI translation services.