They are at it again: A new president takes office with an ambitious slogan of curing bad habits of family-controlled conglomerates. The industrial behemoths hit back mainly in the form of sabotaging new investment, inducing outcries from chaebol-friendly media outlets about an economic crisis. The leader backs off and everything goes back to business as usual as if nothing had happened.
The nation’s five major business associations issued a statement Friday, effectively calling for politicians to refrain from legislation related with “economic democratization” ― President Park Geun-hye’s campaign pledge to rectify unfair and unequal business practices ― at a time when the national economy is mired in “total crisis.”
Yes, Korea’s economic growth has stagnated in the last few years, causing foreign analysts to compare it to a “frog in slowly boiling water.” And large businesses might have felt annoyed with the government’s chaebol bashing amid aggravating business climate at home and abroad.
But let’s just think for one moment. Has there been a good business environment ever for corporate reform? Whenever the government tried to plunge a scalpel into chronic ailments, the nation’s and/or the world’s economy was in crisis. More importantly, does Korea and its leader need to reform the business sector when its economy is cruising around? The nation needs industrial reforms because ― not despite ― its economy has hit a snag, as it did during the Asian financial crisis of 1997-98.
Most Koreans are frustrated with the business community’s extremely short-sighted and narrow-minded adherence to vested interests, as shown in the five lobby groups’ joint statement.
It opposes, for instance, both the moves to extend legal retirement age to 60 and introduce “substitute holidays,” for reason of additional labor costs. Don’t they know most advanced countries, including Japan, have pushed up employment age-limit to as high as 65 years? Moreover, Korea is graying faster than any other country in the world and its poverty rate of aged people is the highest among industrial countries. The nation’s notoriously long working hours have also long been cited as the reason for its low labor productivity and moribund domestic demand.
The statement also urges the political circle to stop “suffocating” large businesses and seek more “balanced” approach in legislating laws restricting excessive intra-group business transactions. Such a call came even after the government sharply watered down its bill aimed at curbing incestuous business practices among chaebol affiliates, yielding to corporate pressure. Are these big businesses demanding the government’s unconditional surrender by looking over even illegal trading and tax avoidance?
To goad recalcitrant businesses into more capital spending, the Park administration will announce a major deregulation package tomorrow.
Park should differentiate between reform and regulation. She may have to sharply reduce a myriad of administrative red tapes by twisting the arms of bureaucrats. But ensuring a fair trade order and advancing the Stone Age corporate structure are not regulations but crucial reforms to move the overall economy one step forward. Park’s somewhat fuzzy concept of “creative economy” cannot see the light of day unless she keeps chaebol from strangling smaller firms further and, restores balance in the corporate ecosystem.
Former leftist President Roh Moo-hyun attempted but failed to tame chaebol. If the rightist Park also fails, the nation’s political power ― or the nation itself ― will remain tied up by the economic power of a handful of families. The choice is hers: Park must start by moving away from her father’s unfair, imbalanced growth strategy.