Interview: Minister of Strategy & Finance Yoon Jeung-hyun

The Ministry of Strategy and Finance (MOSF) was established in March 2008 when the Ministry of Finance and Economy and the Ministry of Planning and Budget were merged to establish fair tax systems and efficient fiscal/economic policies. As the ministry that oversees the daily economics of the public, it is committed to the advancement of the domestic economy and establishment of growth dynamics through effective policy coordination, fair tax systems, public enterprise reform, systematic distribution of national resources, efficient budget management and active international cooperation. Playing a pivotal role in the Korean economy, the MOSF has to lead the way in the recovery from the current economic difficulties.
I interviewed Minister Yoon to find out his priorities.
The following are excerpts:

The fundamentals of Korea's economy are sound compared to other economies. Korea's financial sector is relatively healthy and measures for bank nationalization have not been taken. The nation holds sufficient foreign reserves and external debt structure is improving since September, 2008. As of the end of June 2009, Korea holds $ 231.7 billion, equivalent to the amount of current payment for 7.4 months, exceeding $ 185.8 billion of current foreign debt (as of the end of the 1st quarter of ‘09). External debt has also decreased from $ 422.5 billion in Sept. '08 to $ 380.1 billion in March '09. Plus, Korea is more fiscally sound than major economies.
At the same time, the Korean government is carrying out corporate restructuring in the public and the private sectors to address remaining unsoundness and inefficiency. It is too early to tell when the Korean economy will make a full recovery as uncertainty remains high. But we predict that the economy will grow further from previous quarter in the second half of this year and post growth rate close to the potential growth rate next year.
Although the Korean economy is projected to grow in the second half of this year, uncertainty remains high. There is a possibility that international financial market could slip into instability again and fiscal space could shrink along with exchange rate and oil price volatility and H1N1 pandemic. Under these circumstances, the Korean government is committed to making every effort to keep robust growth in the second half of this year.
First, until the economy makes a visible recovery, the government will maintain its expansionary macroeconomic stance while aggressively responding to negative factors such as real estate market.
Second, to secure a steady economic recovery driven by the private sector, the Korean government will continue to stimulate private consumption and investment.
Currently, we are exerting strenuous efforts to promote the domestic tourism market, draw more inward tourists, improve business environment and boost investment in R&D and new growth engines.
Third, for job security, Korea is doing its part to raise effectiveness of job policies including job creation in the service industry, start-up promotion and manpower training to meet industry demand.
Fourth, to ease the burden on low-income earners and small business owners who are hit hardest by the economic recession, the Korean government will continuously support them.
Although we experienced economic downturn in the 4th quarter of last year due to the global economic crisis, the economy is now bouncing back faster than other countries. Once recording negative growth in the fourth quarter of last year, Korea's economic growth turned positive in the first quarter of this year. Further, the economy increased 2.6% from previous quarter in the second quarter of this year. However, it is the government driving the economic growth through expansionary fiscal and easy monetary policies, while consumption and investment in the private sector remain sluggish.
The government will maintain its expansionary macroeconomic stance for a while, but private consumption and investment will be the key to steady economic growth. And I think this applies to other countries around the globe, too.
Therefore, to stimulate private consumption and investment, the government will create more jobs, support people's livelihoods, improve business environment and streamline regulations.
With foreign investment facilitation high on the agenda, the Korean government is establishing and carrying out measures needed to achieve the agenda. The aim is threefold: to improve investment environment, to upgrade incentive systems and to strategically draw foreign investment. First, to improve investment environment, Korea will foster a pro-business environment and provide more comfortable living conditions for foreign investors.
Currently, the government is implementing "3-Year Plan for Foreign Investment ('08~'10)," which is aimed at easing regulations on land use, adjusting the taxation system to the global standards and building more schools and clinics for foreigners.
Second, for foreign investors to use them more effectively and efficiently, we will upgrade existing three key incentive systems (e.g. tax cuts and exemption, financial benefit and support for land use).
Third, to strategically draw foreign investment, we will focus on industries such as high-value added industries including green growth industry and new growth engines.

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Interview: Lars Vargo, Ambassador of Sweden to Korea

On 1st July 2009, Sweden took over the Presidency of the EU. This means that for six months, Sweden is leading the EU's work and is responsible for moving important EU issues forward.
The Presidency of the European Council rotates between the Member States on a half-yearly basis. The country presiding over the Council functions as the driving force in the EU's legislative and political decision-making process.
This time around, it is a unique opportunity for Sweden to lead and influence work on important EU issues. At the same time, the country holding the Presidency must be flexible and prepared to deal with unexpected issues.
With the EU-Korea FTA agreement having been announced during the Swedish Presidency, I caught up with Lars Vargo, Ambassador of Sweden to Korea to for his views on the important tasks ahead.
First and foremost, he noted that there are many challenges during Sweden's presidency. The economic downturn still lingers with a high rate of unemployment. Moreover, in reaction to the threat of climate change, the world is expecting to gather in Copenhagen in December to discuss the post-Kyoto Protocol scenario.
“The financial and economic crisis has hit Europe and the rest of the world hard. At the same time, it is the Presidency’s task to represent the EU in the fight against global climate change,” he noted.
In addition, discord on the EU structure among the 27 member states makes the future a little unclear. A referendum will take place in Ireland in October, which many hope will lead to ratification of the Lisbon Treaty, an agreement on a new working system within the EU.
The Treaty is an international agreement signed in Lisbon on 13 December 2007 that would change the workings of the EU. It has not yet been ratified by all EU member states.
Prominent changes include more qualified majority voting in the EU Council, increased involvement of the European Parliament in the legislative process through extended co-decision with the EU Council, eliminating the pillar system, preventing the provision in the Treaty of Nice reducing the number of commissioners, and the creation of a President of the European Council with a term of two and half years and a High Representative for Foreign Affairs to present a united position on EU policies. If ratified, the Treaty of Lisbon would also make the Union's human rights charter, the Charter of Fundamental Rights, legally binding.
The stated aim of the treaty is "to complete the process started by the Treaty of Amsterdam and by the Treaty of Nice with a view to enhancing the efficiency and democratic legitimacy of the Union and to improving the coherence of its action."
Negotiations to modify EU institutions began in 2001, resulting first in the European Constitution, which failed in 2005 due to rejection by French and Dutch voters. The Constitution's replacement, the Lisbon Treaty, was originally intended to have been ratified by all member states by the end of 2008, so it could come into force before the 2009 European elections. However, the rejection of the Treaty on 12th June 2008 by Irish voters means that the treaty cannot currently come into force.
The Swedish Presidency will therefore be closing monitoring the situation.
The most important thing is to ensure that we will be able to gather the EU together to respond to the challenges that people care about and where strong European cooperation can make a difference.
“Together we must deal with the financial crisis and tackle the rising unemployment that is currently affecting the whole of Europe. We must also bring together the whole world to tackle climate change. These two priorities will dominate the Presidency,” he stressed.
But there are also other challenges facing Europe that the Swedish Presidency will be taking on. One is the development and strengthening of EU cooperation on justice and home affairs in the Stockholm Programme. Another task is to adopt an EU strategy for the Baltic Sea region, in order to deal with environmental problems and increase the region's competitiveness, along with continuing the work to develop the European Neighborhood Policy and EU enlargement.
EU expansion is also on the agenda, as Croatia and Turkey have shown interest in joining. Ambassador Vargo said they are welcome as long as they meet the standards of the EU as a prerequisite.
In addition, Iceland applied to join the European Union on 16th July 2009. The application was accepted by the European Council on 27th July and referred to the Commission to analyze Iceland's preparedness for negotiations. Iceland's government has a target date of 2012 for joining the bloc, which will be subject to a referendum in Iceland.
As part of the European Economic Area, Iceland is already a member of the EU's single market. It is also a member of the Schengen Area which removes border controls between member states.
To become a member of the EU, a country must first apply, and then the country must be recognized as a candidate country. For that to happen the country must fulfill the first of the Copenhagen criteria: the candidate country must be a politically stable democracy that respects human rights. Then a negotiation will take place which will consider the country's fulfillment of economic criteria, the country's degree of adoption of EU legislation, and whether there shall be any exceptions.
Ambassador Vargo said that the negotiations on an accession treaty would take less than a year, because Iceland has already adopted two-thirds of EU legislation in relation to the EEA. In any case the Presidency will prioritize Iceland's EU accession process, he said.
The Swedish Presidency will also work to strengthen the EU’s role as a global actor with a clear agenda for peace, development, democracy and human rights.
“We hope that together we can advance the EU’s agenda in an open, efficient and results-oriented manner during the next couple of months,” he said.
As part of the projects that have been planned in Korea for the Swedish Presidency, he said that the Embassy is working to publish a collection of European short stories in Korean, sometime in September.
Speaking specifically about the EU-Korea FTA, Ambassador Vargo said that the agreement would send strong signals against the use of protectionism throughout Europe and the rest of the world. It will bring new opportunities to both the economies.
In this present time of economic downturn it is more important than ever to make real progress on important trade issues, he said.
Ambassador Vargo noted that since the deal has effectively been announced, only the legal process remains now. It is unlikely to be derailed by the separate national parliaments. Every member state has had an opportunity to raise all its concerns throughout the negotiation process, and the final announcement was made when no one had any more objections. Also, the EU’s Article 133 Committee, in charge of the bloc’s trade policies, has cleared it, he said. It is a very important step in our relationship and indicates the dawn of a new partnership,” he said.
Although there is always some adjustment cost, FTAs are ultimately beneficial to both sides and there is a strong economic rationale. If one looks at the trade figures before and after trade agreements are negotiated, one can find that there is generally a very substantial increase in trade that takes place. Korea and the EU share a very dynamic business relationship with large investments on both sides and large amounts of goods traded, he noted.
Referring to the significance of the FTA in the context of the WTO Doha Development Agenda, he said that multilateral processes are essential to the world trade system and are not contradictory with bilateral processes. Both can go forward at the same time. Even though the EU is conducting bilateral agreements with many countries, it is also very keen to conclude multilateral agreements.

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Interview: Mr. Constant Van Aerschot, Co-Chairman, Energy Efficiency in Buildings (EEB) project of WBCSD

The World Business Council for Sustainable Development (WBCSD) is a CEO-led, global association of some 200 companies dealing exclusively with business and sustainable development. The Council provides a platform for companies to explore sustainable development, share knowledge, experiences and best practices, and to advocate business positions on these issues in a variety of forums, working with governments, non-governmental and intergovernmental organizations.
Members are drawn from more than 35 countries and 20 major industrial sectors. The Council also benefits from a global network of about 57 national and regional business councils and regional partners.
The $15 million four-year Energy Efficiency in Buildings (EEB) project of WBCSD is the leading industry-only group that envisions a world where buildings consume zero net energy. The project is chaired jointly by Lafarge and United Technologies Corporation and has 12 other members.
On a recent visit to Seoul, Mr. Constant Van Aerschot, co-chairman of the project, who is also Director, Construction Trends, Lafarge gave me a few insights into the latest report that has been issued by the Council. The following are excerpts from the interview.

Saving energy is the lowest cost way to cut greenhouse gases. Much building energy is wasted because of poor design, inadequate technology and inappropriate behaviors. Businesses need to apply expertise and finance to develop and promote new approaches to energy efficiency, but transformation will not be achieved through the market alone.
Building professionals, owners and users do not grasp the urgency and remain unmotivated to act. Government action is necessary to improve the transparency of energy consumption in buildings and to stimulate the transformation of business models to quickly change energy consumption throughout the building sector – in every country, in existing buildings as well as new ones and in residential as well as commercial property.
All building sector stakeholders need to adopt a sense of urgency and a new mindset in which building energy is a top priority. Businesses will only succeed if they align with a sector transformation, adopting disruptive technologies and business models. Policy-makers need to introduce strong regulatory frameworks that support the market transformation.
New modeling by the WBCSD shows how energy use in buildings can be cut by 60 percent by 2050 - essential to meeting global climate change targets - but this will require immediate action to transform the building sector.
Buildings worldwide account for a surprisingly high 40% of global energy consumption, and the resulting carbon footprint, significantly exceeding those of all transportation combined. Large and attractive opportunities exist to reduce buildings’ energy use at lower costs and higher returns than other sectors. These reductions are fundamental to support achieving the International Energy Agency’s (IEA) target of a 77% reduction in the planet’s carbon footprint against the 2050 baseline to reach stabilized CO2 levels called for by the Intergovernmental Panel on Climate Change (IPCC).
At the same time, substantial investments will be required to achieve this target. These will require the combination of actions called for in this report, including building energy codes, investment subsidies, labeling and reporting mechanisms, increased and trained workforce capacity, and evolving energy-efficiency designs and technologies. All are intended to raise energy awareness globally and influence consumer and investor behavior and choice.
The study’s recommendations are based on a unique data inventory of the building stock in six of the world’s largest economic regions (Brazil, China, EU, India, Japan and USA) accounting together for 70% of the world’s GDP, and divided between residential and commercial and existing and new building types. Financially driven behaviors against energy-efficiency technologies were modeled to show costs and savings under multiple scenarios. This degree of data and sophistication has never been achieved before.
EEB modeling shows that increasing the price of energy or carbon only slightly increases the implementation of energy efficiency in buildings. At today’s energy prices, carbon footprint reductions would only increase from 52% to 55% with an incremental carbon cost of $ 40/ton.
“We value human life to an extraordinary degree and have put in place building life safety codes and inspection mechanisms over a century or more. The experience in the United States has been that these add 5% to building costs, and we should think comparably about building energy codes and related mechanisms worldwide.
Strong barriers exist in the building sector. Removing them will reduce climate policy costs overall and will be particularly important in alleviating the impact on consumers.
EEB has considered high-level scenarios but has taken a bottom-up, market-driven approach to understanding the barriers to lower energy use, based on the most detailed view ever of the current state of energy demand in the building sector. The project developed a unique computer model that simulates decisions about energy investments in a specific building subsector to identify the likely mix of design and construction options under alternative policy packages.
To achieve an energy-efficient world, governments, businesses and individuals must transform the building sector through a multitude of actions, which include increasing energy awareness globally, he said.
The study and analysis modeled three scenarios for the world’s response to the climate challenge in buildings:
• Complacency and inaction leading to a failure to tackle climate change
• Inadequate action resulting in only incremental improvements in energy efficiency and a substantial failure to curb climate impacts
• Coordinated, intensive action that transforms the building sector and contributes proportionately to solving climate change.
The third scenario is understandably the only option that can result in the energy and carbon footprint reductions needed. A mix of measures tailored to specific geographies and building subsectors, including increased energy awareness globally, is required for a complete solution. Additional approaches include building energy codes, labeling and reporting mechanisms, appropriate energy prices and carbon costs, investment subsidies, increased and trained workforce capacity, and evolving energy-efficient designs and technologies that use passive and active approaches.

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Interview: PCNC Chairman Kang Man-soo

The Presidential Council on National Competitiveness focuses on heading regulatory reform and deregulatory measures to create a business-friendly environment for both domestic and foreign companies, strengthening Korea's economic growth potential, and expanding social capital.
Amid falling inbound investment due to the global financial crisis, the Korean government is taking steps to attract more foreign direct investment (FDI). A couple of months ago, the PCNC, presided over by President Lee Myung-bak, announced new measures aimed at attracting more FDI. The new measures include increasing the size of the government's cash grants to foreign investors and temporarily removing the minimum investment requirements imposed on those wanting state subsidies.
Under the current law, the current level of cash grants equals about 5 to 10 percent of total funds invested by a foreign company. Also, to be eligible for cash grants, foreign firms need to have invested $10 million or more.
The government will scrap these rules in order to offer benefits to more firms and will increase the cash grants to account for about 10-30 percent of total funds invested by foreign firms.
To strategically attract those foreign firms that will also benefit the Korean economy better, the government will first select 100 foreign firms that are “strategically important” to the Korean economy and offer them incentives in return for investing here.
Meanwhile, cash grants for firms that have or plan to build research centers here will also be expanded. FDI has long been an important means to help the domestic economy and create employment. With these steps, the PCNC is sending out clear signals that foreign investors are welcome in Korea.
To understand more about the Council’s work and the impact of its policy decisions, I interviewed Mr. Kang Man-Soo, Chairman of PCNC. The following are excerpts:

Korea has a brilliant track record of economic growth. However, we are experiencing low investment associated with decelerated growth of below 5% since 2000's. Subdued employment and rapid population ageing have also become major challenges to mid- and long-term prospects of the Korean economy. Moreover, underlying but significant issues such as strengthening the rule of law, expanding social trust, improving the productivity of the public sector, and promoting productive labor relations need to be addressed. In this context, the PCNC was established along with the inauguration of President Lee Myung-bak in February, 2008 as a key advisory body to the President.
PCNC focuses on heading regulatory reform and deregulatory measures to create a business-friendly environment for both domestic and foreign companies, strengthening Korea's economic growth potential, and expanding social capital by making advancements in laws, regulations and institutional infrastructure based on global standards. I was appointed as the Chairman in February of this year, following my term as the Minister of Strategy and Finance.
PCNC is comprised of government members; heads of business associations; representatives from the ruling party, labor unions, consumer groups; foreign business leaders; and experts from various sectors of the economy. In particular, we value the representation of foreign businesses at the PCNC, and the President of the EUCCK is also a member of the PCNC.
Since the establishment of the PCNC, meetings attended by the President have been held every month. During these meetings, new institutional reform and deregulatory measures are presented and discussed among its members and relevant government ministers.
PCNC has about 30 members representing all sectors of the economy. In addition to the monthly plenary meeting, 4 sub-councils in the areas of regulatory reform, legal and institutional advancement, industrial competitiveness, and public sector reform, were created to promote in-depth discussions. PCNC members participate in one of these sub-councils, and conduct studies on key national competitiveness issues in the respective areas.
In addition, PCNC is able to operate advisory committees for selected issues that require more expertise, continuous feedback and review. Such committees invite experts from various sectors outside PCNC members. One of them is the Advisory Committee on the Romanization of Korean. It was established to revise the current romanization system which is seen by most foreign businesses in Korea as being complicated and misleading. Measures for adopting a more internationally recognized Romanization system was recently discussed at the PCNC meeting and work is in progress.
The vision of the PCNC is to build a first class advanced country. To do so, we will strengthen competitiveness for a new economic paradigm by expanding domestic demand, maintaining a current account surplus, and strengthening economic potential.
In order to achieve this vision, the PCNC identifies 5 key missions, which are: tackling the crisis, sustaining growth, promoting future growth engines, mobilizing global capacity, and accumulating social capital.
History has shown us that countries that have equipped themselves with new innovative ideas have always come out of crises more competitive than before. The PCNC will continue to implement measures to overcome the challenges of the global economic crisis, and prepare for the dawning of a new post-crisis economic paradigm.
This unprecedented global economic crisis has left us in a survival game filled with doubts and uncertainty. International organizations such as the IMF and OECD project the Korean economy to recover faster than other countries. In addition, recent quarter-on-quarter growth is showing signs of recovery. However, I believe that we have yet to be fully optimistic for recovery, and outlooks on the aspects of recovery and duration of crisis are still uncertain.
We have to be very cautious about prospects of the Korean economy since fiscal stimulus such as massive tax cuts and front-loaded spending are major engines of recovery. The stimulus measures are not able to replace private spending and investment on a sustainable basis. In particular, Korea's economic outlook will depend highly on the recovery of the global economy including the EU and the US, due to our high dependence on the external sector such as exports.
Therefore, the Korean government will focus on policies to sustain the recent trend of economic recovery, while preparing a "Plan B" for the worst case scenario.
The government plans to continue implementing efforts to expand domestic demand, restoring growth and economic vitality. Such efforts will include, among others, continued deregulation and tax cuts to promote private investments, corporate and financial restructuring, and job creation and sharing.
Although it is unclear when we will fully recover from the crisis, I want to emphasize that Korea has always taken crises and turned them into opportunities.

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Interview: Mr. Byun Moo-keun, Commissioner of Defense Acquisition Program Administration

The Defense Acquisition Program Administration (DAPA) was launched on January 1st, 2006 in order to perform more transparent and systematical tasks in defense capability improvement programs, defense industry promotion and defense material procurement. Since its establishment the execution of defense programs in Korea has become more transparent, credible and predictable by the law of the defense program.
I recently interviewed Mr. Byun Moo-keun, Commissioner of DAPA. The following are excerpts:

One of the main objectives of establishing the administration is defense industry product export. DAPA will be the forerunner for the economic rescue and the green growth policy. It will improve the systems in all areas by regulation reformation, expanding investment in the national defense R&D, nurturing and supporting advanced small/middle sized defense companies, and maximizing defense industry exports.
“DAPA plans to foster pan-governmental international cooperation along with a market expansion system to increase export. It will also support the export marketing departments of each defense industry enterprise as well as promote association with the KOTRA. The National Assembly, the government, the armed forces, and industry will concentrate all their efforts and seek distinctive export revitalization methods for each country.”
To promote an effective defense industry, DAPA operates the Integrated Project Team (IPT) which is meant to manage projects efficiently through centralized planning, budgeting, quality assurance, and technology management. A project manager is responsible for all the processes after a decision on a particular requirement until the completion of the program.
DAPA manages contract related business by making a matrix of check lists for procedures and steps from the beginning of a project as well as reinforce a follow-up management system on domestic and international acquisition to ensure the supply of quality products in an appropriate time period.
He noted that the existing test and evaluation system had inadequate legal regulations, had a vague locus of responsibility on test and evaluation for each acquisition step, and voluntarily performed test and evaluation jobs based on standards set by subjective. Therefore, it was not possible to test and evaluate all major projects in the acquisition process.
DAPA is seeking to efficiently promote the defense industry by strengthening the test and evaluation procedures for each acquisition. By establishing related statutes and support so that projects can be smoothly carried out DAPA will strengthen the objectivity and reliability of tests and evaluations.
“We operate an appointment qualification system in order to ensure the expertise of defense acquisition personnel. This system ensures that only experts find their way to each position,” he said.
"In order to sustain economic growth and develop our country's national competitiveness in this ever competing world, we should develop domestic technology first. Therefore, the Defense Acquisition Program Administration, to effectively perform industry creation, production, and acquisition, will first adopt civil standards when there are two different standards between national defense and civil groups and find a way to use national defense and civil technologies in a cooperative fashion."
“What is more, by pursuing the development of joint technology of national defense and civil groups at a pan-government level, it will maximize the synergistic effect of research and development and raise the effectiveness of technology investment,” he said.
Because of recent changes in the domestic and international defense industry environment, the Defense Acquisition Program Administration will abolish it policy of defense industry protection and nurturing, he said.
“This policy weakens the competitiveness of the existing defense industry and abolishing it will help develop a reasonable defense industry based on competition.”
However, in the event that the current system becomes extremely competitive, DAPA will encourage the industry not to hoard their know-how and invested facilities. In that situation, DAPA will also establish a system that will protect small and medium enterprises with relatively weak competitiveness and duplicated investment due to over-heated competition.
He said the basic direction of the Defense Acquisition Program Administration regarding information-orientation is: to create a foundation for information-orientation to achieve the mission and vision of the Administration, to pursue the information-orientation plan of the Administration in relation to electronic government roadmap promotion, and to build a systematic and effective information system.

The full interview can be read here.

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Interview: Mr. Lee Young-hee, Minister of Labor

In 2008, the new government of President Lee Myung-bak caused a paradigm shift in labor policy. The new paradigm aims to pursue growth and employment simultaneously by supporting economic revival and job creation to make Korea a leading advanced nation. This means pursuing economic growth and job creation at the same time by boosting market economy, developing human resources and achieving active welfare.
But now with the Korean economy facing a serious crisis, it has even more challenges. Falling exports and shrinking domestic demand are expected to lead to negative growth and the employment situation is deteriorating rapidly. There is even a possibility that the current economic crisis could become a disaster never experienced before in terms of its scale, duration and impacts. Moreover, this crisis is under way not just in Korea but also all over the world, so it cannot be easily overcome by the government's efforts alone without cooperation from other social partners.
I caught up with Mr. Lee Young-hee, Minister of Labor to give me an insight into the government plans on the labor front. Especially since the “strike season” is due to start soon.
The following are excerpts:

“With the release of the ‘Agreement between Labor, Management, Civic Groups and the Government to Overcome the Economic Crisis" on February 16th, the spirit of labor-management cooperation is spreading. Nevertheless, the possibility for labor-management conflicts remains concerning issues including corporate workforce reduction and improvement in labor laws and systems.”
The major contents of the agreement were that labor unions will restrict strikes and freeze, return or cut pay according to companies' conditions in the course of overcoming the economic crisis. The management will root out unfair labor practices, and maintain existing levels of employment.
“The government will actively support the efforts to retain and share jobs for sharing burdens by labor and management. It will expand the social safety net, and come up with protection measures for non-regular workers and the small-scale self-employed,” he said.
For the faithful implementation of the agreed matters, all sides will establish and operate an implementation checkup unit, Minister Lee added.
Speaking on the policies that the ministry will pursue this year, he noted that steps will be taken to minimize unemployment of employed workers. Voluntary labor-management cooperation for minimizing lay-off, refraining from wage increase and improving productivity, voluntary cooperation and concession by labor and management are spreading.
“The ministry will actively provide employment retention subsidies, when labor and management take job stability measures through closedown and suspension from service. For the suspension and reduction of work to be an opportunity for better productivity, we will encourage enterprises to conduct vocational training rather than simple suspension of business and lay-off,” he said.
For SMEs whose training capacities are not sufficient, support will be given through training consortium projects, etc. Support for skills development will be strengthened for vulnerable workers, including non-regular workers.
Intensive employment assistance through vocational counseling for people who face difficulty in landing a job, the MOL will establish individual action plan (IAP) for employment support and provide intensive services.
The MOL will also expand training projects for the unemployed and offer loans for living expenses during training period. Support for job transfer will be activated through joint re-employment support center for labor and management.
“We will also expand the scale of programs. More than 50% of all social service jobs will be allocated to vulnerable groups, including low-income unemployed people, with the aim of responding to the crisis.”
The ministry will activate the system of paying allowances to workers whose employment is maintained or extended under a wage peak system. The government subsidies for hiring the disabled will be expanded and skills development of the unemployed disabled will be strengthened according to the type of disability.
Centering on the five sectors of auto, public, finance, health and construction, the ministry will operate the ‘Industrial Relations Task Force in Vulnerable Industries’ with the aim of supporting dispute resolution.
“We will select and intensively manage core establishments with big implications and establishments vulnerable to labor disputes. We will continue to enhance policy predictability by maintaining its policy direction towards laws and principles. At the same time, it will help labor and management to resolve conflicts on their own.”
In terms of illegal actions, the ministry will take a strict action no matter whether it be labor or management. Correction guidance will be provided for illegal actions, including unfair labor practices, occupancy of production facilities and political strikes. At each regional labor office, a ‘Team for Preventing Illegal Actions’ will be run with the aim of guiding the compliance with laws.
Concerning the permission of multiple trade unions, Minister Lee said that the MOL will improve the bargaining system and wage payment to full-time union officials. Through discussions at the tripartite commission, efforts will be made to reach an agreement during the first half of this year. Based on discussions, the MOL will pursue measures to submit a legislative bill, prepare subordinate laws and lay the foundation for administrative support.

For those who are interested, the full interview can be read here.

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