Over 1 in 4 foreign investors concerned over 'Korea risk'

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Labor issues single-highest risk factor, biz environment not improved under Moon administration

By Lee Kyung-min

More than one in four foreign-invested firms said Korea has particularly high risks compared to other countries, as best characterized by rigidity in the labor market and unresolved challenges in the business environment, a survey showed Friday.

According to the survey conducted by the Korea Enterprises Federation on 220 foreign-investor firms with at least 50 employees, 27.7 percent said there were Korea-specific risks that hamper their businesses.

Overregulation by legislation that lacks transparency topped the list at 31.1 percent.

Inconsistency and unpredictability in administrative regulation ranked second (27.9 percent), followed by rigidity in labor laws and conflict-oriented management-labor relations (24.6 percent), and negative perceptions of foreign investors (16.4 percent).

Those who agreed that the business environment has not improved outnumbered those who didn't, 52.3 to 42.3 percent.

Almost a third, or 29.2 percent, of firms with at least 300 employees said they were most concerned over new legislation whereby employers or CEOs are subject to a minimum prison term of one year or a fine of up to 1 billion won ($843,000), if a worker dies and it is determined that management failed to introduce adequate safety measures. The fine for a company is up to 5 billion won.

If a worker suffers an injury or develops an illness, the law dictates a prison term of up to seven years and a fine of up to 100 million won.

For firms with less than 300 employees, the minimum wage increase topped the list of concerns at 45.2 percent.

Regulations in need of prompt revision included labor (51.4 percent), followed by environmental (42.7 percent), safety and public health (40 percent), anti-trust (28.6 percent) and governance structure (18.2 percent).

Among labor regulations, 48.6 percent said working-hour standards should be eased, followed by a relaxing of rigidity in wages (37.3 percent).

The federation called for a swift plan to attract foreign investors, a critical set of national strategies needed to underpin sustainable growth in the eventual aftermath of the COVID-19 pandemic.

“An increasing number of countries are competing to draw foreign investment in the post-pandemic era,” an official from the federation said. “Easing labor regulations should top the strategy priority to address the shared concern, as clearly illustrated by the survey findings.”