The South Korean prime minister presented his reforms to revive growth, slowed down by the global situation. The solidarity contribution that Moon had imposed on the 100 largest companies in the country is abolished. The legal limit of the 52-hour work week may also be revised. But all these measures will have to go through parliament, where the Conservatives alone do not have a majority.
Seoul () – It was never in doubt that the economic program of the new South Korean Prime Minister, Yoon Suk-yeol, was from right During the presidential election campaign, the conservative candidate had already expressed his conception of an economy driven by the private sector. In essence, Yoon had promised voters more market freedom and less public control, albeit with the nuances that these terms take on in the South Korean context.
Now Yoon has unveiled his economic reform plan to revive growth, which is estimated to be the lowest in three years. Between bottlenecks in supply chains, skyrocketing inflation and rising interest rates, forecasts for the expansion of the south korean economya in 2022 they have been reduced from 3.1% to 2.6%.
When he presented the reforms as a response to global economic turmoilYoon said that “our economy and our markets are shaken as we are being catapulted into a complex crisis amid fears of stagflation.” Then, referring to the topics on her agenda, she added that “we will take bold steps to remove any legislation that hampers competitiveness and entrepreneurship.”
The proposal that has drawn the most attention is the tax reduction for companies in the highest bracket. To finance its social spending program, the previous progressive government raised the rate for the roughly 100 largest companies in the country to 25%. Now Yoon is trying to dismantle the political legacy of Moon Jae-in’s government and wants to revise that decision by returning the tax to 22%.
Yoon’s plan aims to give companies a central role in driving growth, offering them the facilities and tools to achieve that goal. The proposals presented by the government include a significant dose of deregulation, for example, by revising the legal limit of the 52-hour work week or reducing the number of companies subject to the succession tax. On the financial side, the Conservative government has suggested suspending capital gains taxes on small investors, to allow listed companies to raise new funds. Additionally, stock options for startups should be given a tax break, to make it easier for them to hire the best talent out there. In the coming months, the government also intends to review the pension system and state share ownership.
However, the South Korean political economy works very differently from the classic Anglo-Saxon neoliberal model, from which the Korean right departs. In effect, the Conservative proposalsThey also include greater tax relief for strategic investments in next-generation semiconductors or OLED screens, to encourage companies that have relocated production to return home, and public support for the infrastructure necessary for the development of new technologies.
Yoon has promised the business associations that he intends to create a more business-friendly environment, which is basically what the business associations expect. large South Korean companies. For now, the proposed reforms remain a wish list, as the Conservatives do not have a majority in Parliament. The political dialectic of the coming months will tell which of these promises can be fulfilled and which cannot.
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