South Korea's new president draws ire of small businesses he's vowed to help

Thu May 25, 2017 1:23am EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Joyce Lee and Hyunjoo Jin

SEOUL (Reuters) - Small businesses in South Korea fear their profits could be cut to the bone and some could be forced to close if the country's new president pushes ahead with plans to raise minimum wages, restrict contract staff numbers and reduce working hours.

Since his election earlier this month, President Moon Jae-in has made boosting job prospects for young South Koreans a signature policy, while also protecting workers' rights.

With that in mind, he has also targeted reform of South Korea's giant family-run conglomerates, or chaebol, to make them less dominant and help smaller firms become engines of growth in Asia's fourth-largest economy.

Just last week, Moon's nominee to head the country's anti-trust regulator noted that South Korea's ten largest conglomerates - including household names like Samsung and Hyundai Motor Group - employ only 1 million of South Korea's 19 million actively employed workforce.

"The ultimate goal of chaebol reform is to protect small companies and self-employed business owners so they can create many more new jobs," said Kim Sang-jo, the president's choice to head the Korea Fair Trade Commission.

But many businessmen fear that instead of generating jobs, smaller businesses will be crippled by the higher cost of hiring and paying workers if Moon's labor reforms are implemented.

Take for example, Sam Heung Heat Treatment, a company employing around 50 workers at a factory supplying components to automakers like Hyundai (005380.KS: Quote) and General Motors Co (GM.N: Quote).

Chairman Joo Bo-won told Reuters his firm could fold because of policies he says would both double the wage bill and double the number of full time workers needed to make up for the shorter working week.   Continued...

 
FILE PHOTO: Employees take a selfie with South Korean President Moon Jae-in at the Incheon International Airport in Incheon, South Korea, May 12, 2017.   Yonhap via REUTERS