Latest news with #YellowEnvelopeAct
UPI
2 days ago
- Business
- UPI
Will new South Korean administration attract more foreign investment?
South Korean President Lee Jae Myung delivers a speech during a press conference to mark his first 30 days in office at the Yeongbingwan, the state guest house of the Blue House, in Seoul in early July. File photo by Kim Min-Hee/EPA/Pool Aug. 14 (UPI) -- The South Korean government will hold a special event Friday to commemorate President Lee Jae Myung's recent election, coinciding with the 80th anniversary of Liberation Day from Japan's 1910-1945 colonial rule. The ceremony will be held because Lee did not have a formal inauguration. He assumed office immediately after winning the June 3 election, which was triggered by the impeachment of former President Yoon Suk-yeol over his declaration of martial law last December. In his first two months in office, Lee has introduced a range of economic and legal policies, which could influence the decisions of foreign investors. So far, reactions have been mixed. One of the most contentious issues is the so-called Yellow Envelope Act, intended to safeguard subcontracted workers, curb corporate lawsuits seeking damages from strikes and expand legal responsibility for executives who avoid collective bargaining. Business associations have asked the National Assembly to reconsider its legislation, which would amend the Trade Union Act, warning that it could negatively affect the economy by emboldening already militant trade unions. However, the ruling Democratic Party has vowed to pass the bill this month, which alarmed foreign companies here, as demonstrated by the response from the American Chamber of Commerce in Korea. "A flexible labor environment is essential to strengthening Korea's competitiveness as a business hub in the Asia-Pacific region," its chairman, James Kim, said in a statement. "If enacted in its current form, this legislation could influence future investment decisions by American companies considering Korea." The European Chamber of Commerce in Korea also voiced concern, particularly over the broadened definition of "employer" to include those from subcontracted firms. It even warned that it could prompt foreign firms to exit the market. "Given the numerous criminal sanctions imposed on employers under the Trade Union Act, this vague and expanded definition may treat business operators as potential criminals and significantly discourage business activity," the chamber said. "The impact is particularly severe for foreign-invested companies, which are highly sensitive to legal risks stemming from labor regulations. For example, if a company faces the risk of criminal penalties for refusing to engage in collective bargaining -- especially in situations where it is unclear which union to negotiate with -- it may ultimately choose to withdraw from the Korean market," it said. On July 31, the new administration announced plans to roll back recently imposed tax cuts on corporate income and capital gains, which were made in 2022 during the Yoon administration in 2022. Global financial think tanks, including Citigroup, Goldman Sachs and CLSA, expressed concern. Citigroup noted that the proposed tax hikes would be "unfavorable for business and equity market investors' confidence." The market reaction was swift. On Aug. 1, the next trading day, offshore investors sold $470 million worth of benchmark KOSPI shares, ending a seven-day streak of net purchases. They have since returned as buyers, though. "President Lee has pledged to double the nation's stock market value during his five-year stint, and one of his main strategies was to draw foreign investment by improving the investment environment," Lee Phil-sang, an adviser at Aju Research Institute of Corporate Management and former Seoul National University economics professor, told UPI. "Yet, his administration has come up with various anti-corporate policies. They would not encourage foreigners to invest in Korea," he said. Still, not all of Lee's initiatives have disappointed markets. Early last month, the country's unicameral parliament approved an amendment to the Commercial Act, expanding board members' fiduciary obligations to better protect minority shareholders' interests. President Lee has endorsed the legislation to help eliminate the so-called "Korea discount," which refers to the tendency for Korean companies to trade at lower valuations than comparable firms in other major economies. "After President Lee made an oath, stock prices have remained bullish and foreign investors have gobbled up Korean shares. That is clear evidence that his foreign investor policy is working," Seoul-based consultancy Leaders Index CEO Park Ju-gun said in a phone interview. Since Lee's inauguration, the KOSPI has jumped nearly 20%. During the span, foreign investors have been buyers, pouring in more than $6.7 billion, according to the Korea Exchange. By contrast, Sogang University professor Kim Young-ick downplayed the appreciation of stock values. "Our share prices have risen mainly due to the removal of political uncertainty following the ouster of erstwhile President Yoon. That is simply the normalization of temporarily undervalued stock prices," he said. "To continue the upward momentum, the country's economy should perform better. President Lee's goal of increasing the potential economic growth rate to 3% through AI investment sounds good. But it will be very difficult to achieve," he added.
Miami Herald
04-06-2025
- Business
- Miami Herald
Analysis: New South Korean President Lee Jae-mying expected to enact pro-labor bills
June 4 (UPI) -- During May's televised debate ahead of the South Korean presidential election, Democratic Party candidate Lee Jae-myung was asked about the pro-labor "Yellow Envelope Act." Lee, who was elected as the country's 21st state head Tuesday, replied positively about the bill, which is designed to limit employers' damage claims against workers involved in strikes. "The Yellow Envelope Act reflects the Supreme Court's verdicts and is aligned with the International Labor Organization standards. Its legislation is something that should be done obviously," he said. Observers point out that the response amply demonstrates what may lie ahead for Asia's fourth-largest economy under Lee's leadership during the next five years. "President Lee is likely to immediately pursue labor-friendly legislation like the Yellow Envelope Act. In fact, the National Assembly will convene Thursday at the request of the Democratic Party," political commentator Choi Soo-young told UPI. "This means that the Yellow Envelope Act can be passed a day after Lee's inauguration. Under his stewardship, many similar bills are likely to be introduced," he predicted. The Democratic Party, which holds a majority of seats in the country's unicameral parliament, headed the passage of the Yellow Envelope Act twice in 2023 and 2024. Back then, however, former President Yoon Suk-yeol vetoed it as the country's major business associations expressed concerns that the bill might embolden already militant trade unions. Even the American Chamber of Commerce in Korea echoed such a sentiment. In addition to launching labor-friendly policies, experts expected that the new administration would channel funds in a bid to boost the sluggish economy in the short term. "The South Korean economy is feared to grow below the potential growth rate this year due to the lack of demand. The new government will try to deal with this through increased public spending," Sogang University economics professor Kim Young-ick said in a phone interview. "For example, President Lee is projected to proactively implement the local currency system, even if it means incurring a fiscal deficit," Kim said. President Lee has expressed his commitment to promoting local currencies, or vouchers issued by regional governments that are valid only within designated areas, to revitalize the economy. The Bank of Korea nearly halved the country's 2025 growth forecast from 1.5% to 0.8% on Thursday, falling short of its potential growth rate estimated to be around 2%. Over the past three decades, the Korean economy has failed to achieve 1% annual growth only three times: in 1997 amid the Asian financial crisis, in 2009 because of the global financial turmoil, and in 2020 during the virus pandemic. "As a mid- to longer-term goal, President Lee is projected to jack up the country's growth potential by underpinning productivity. One effective approach would be to fully take advantage of artificial intelligence-powered systems," Kim said. Lee Phil-sang, an adviser at Aju Research Institute of Corporate Management and former Seoul National University economics professor, worried that President Lee would come up with populist policies at the expense of the country's fiscal health. "Rather than trying to improve South Korea's economic fundamentals through such measures as deregulation, President Lee is feared to just increase government spending," Lee said. "Such stimulus policies may have a short-term effect. But it would not make a big difference in the long run. Instead, such an approach may result in a steep rise in public debt. I am concerned that President Lee appears indifferent to rising debt," he said. During last month's election campaign, President Lee said that the government should not overly worry about sovereign debt. "There are people saying ignorant things like that the country must never go into debt because the national debt has exceeded $730 billion," he said. "But if the government doesn't spend money during times like this, then when will it ever?" he asked. "Compared to our annual gross domestic product, the government debt is quite low at less than 50%." President Lee also has been a prominent advocate of universal basic income, which is designed to provide all citizens with a guaranteed minimum level of income. During the 2022 election campaign, when former President Yoon defeated then-candidate Lee, the latter proposed an annual payment of around $180 per person with the five-year goal of raising it to $730. At the time, the idea also faced criticisms of its financial feasibility. Copyright 2025 UPI News Corporation. All Rights Reserved.
Yahoo
04-06-2025
- Business
- Yahoo
Analysis: New South Korean President Lee Jae-mying expected to enact pro-labor bills
June 4 (UPI) -- During May's televised debate ahead of the South Korean presidential election, Democratic Party candidate Lee Jae-myung was asked about the pro-labor "Yellow Envelope Act." Lee, who was elected as the country's 21st state head Tuesday, replied positively about the bill, which is designed to limit employers' damage claims against workers involved in strikes. "The Yellow Envelope Act reflects the Supreme Court's verdicts and is aligned with the International Labor Organization standards. Its legislation is something that should be done obviously," he said. Observers point out that the response amply demonstrates what may lie ahead for Asia's fourth-largest economy under Lee's leadership during the next five years. "President Lee is likely to immediately pursue labor-friendly legislation like the Yellow Envelope Act. In fact, the National Assembly will convene Thursday at the request of the Democratic Party," political commentator Choi Soo-young told UPI. "This means that the Yellow Envelope Act can be passed a day after Lee's inauguration. Under his stewardship, many similar bills are likely to be introduced," he predicted. The Democratic Party, which holds a majority of seats in the country's unicameral parliament, headed the passage of the Yellow Envelope Act twice in 2023 and 2024. Back then, however, former President Yoon Suk-yeol vetoed it as the country's major business associations expressed concerns that the bill might embolden already militant trade unions. Even the American Chamber of Commerce in Korea echoed such a sentiment. In addition to launching labor-friendly policies, experts expected that the new administration would channel funds in a bid to boost the sluggish economy in the short term. "The South Korean economy is feared to grow below the potential growth rate this year due to the lack of demand. The new government will try to deal with this through increased public spending," Sogang University economics professor Kim Young-ick said in a phone interview. "For example, President Lee is projected to proactively implement the local currency system, even if it means incurring a fiscal deficit," Kim said. President Lee has expressed his commitment to promoting local currencies, or vouchers issued by regional governments that are valid only within designated areas, to revitalize the economy. The Bank of Korea nearly halved the country's 2025 growth forecast from 1.5% to 0.8% on Thursday, falling short of its potential growth rate estimated to be around 2%. Over the past three decades, the Korean economy has failed to achieve 1% annual growth only three times: in 1997 amid the Asian financial crisis, in 2009 because of the global financial turmoil, and in 2020 during the virus pandemic. "As a mid- to longer-term goal, President Lee is projected to jack up the country's growth potential by underpinning productivity. One effective approach would be to fully take advantage of artificial intelligence-powered systems," Kim said. Lee Phil-sang, an adviser at Aju Research Institute of Corporate Management and former Seoul National University economics professor, worried that President Lee would come up with populist policies at the expense of the country's fiscal health. "Rather than trying to improve South Korea's economic fundamentals through such measures as deregulation, President Lee is feared to just increase government spending," Lee said. "Such stimulus policies may have a short-term effect. But it would not make a big difference in the long run. Instead, such an approach may result in a steep rise in public debt. I am concerned that President Lee appears indifferent to rising debt," he said. During last month's election campaign, President Lee said that the government should not overly worry about sovereign debt. "There are people saying ignorant things like that the country must never go into debt because the national debt has exceeded $730 billion," he said. "But if the government doesn't spend money during times like this, then when will it ever?" he asked. "Compared to our annual gross domestic product, the government debt is quite low at less than 50%." President Lee also has been a prominent advocate of universal basic income, which is designed to provide all citizens with a guaranteed minimum level of income. During the 2022 election campaign, when former President Yoon defeated then-candidate Lee, the latter proposed an annual payment of around $180 per person with the five-year goal of raising it to $730. At the time, the idea also faced criticisms of its financial feasibility.
UPI
04-06-2025
- Business
- UPI
Analysis: New South Korean President Lee Jae-mying expected to enact pro-labor bills
Newly elected South Korean President Lee Jae-myung is expected to implement pro-labor policies. Photo by Ahn Young-joon/EPA-EFE June 4 (UPI) -- During May's televised debate ahead of the South Korean presidential election, Democratic Party candidate Lee Jae-myung was asked about the pro-labor "Yellow Envelope Act." Lee, who was elected as the country's 21st state head Tuesday, replied positively about the bill, which is designed to limit employers' damage claims against workers involved in strikes. "The Yellow Envelope Act reflects the Supreme Court's verdicts and is aligned with the International Labor Organization standards. Its legislation is something that should be done obviously," he said. Observers point out that the response amply demonstrates what may lie ahead for Asia's fourth-largest economy under Lee's leadership during the next five years. "President Lee is likely to immediately pursue labor-friendly legislation like the Yellow Envelope Act. In fact, the National Assembly will convene Thursday at the request of the Democratic Party," political commentator Choi Soo-young told UPI. "This means that the Yellow Envelope Act can be passed a day after Lee's inauguration. Under his stewardship, many similar bills are likely to be introduced," he predicted. The Democratic Party, which holds a majority of seats in the country's unicameral parliament, headed the passage of the Yellow Envelope Act twice in 2023 and 2024. Back then, however, former President Yoon Suk-yeol vetoed it as the country's major business associations expressed concerns that the bill might embolden already militant trade unions. Even the American Chamber of Commerce in Korea echoed such a sentiment. In addition to launching labor-friendly policies, experts expected that the new administration would channel funds in a bid to boost the sluggish economy in the short term. "The South Korean economy is feared to grow below the potential growth rate this year due to the lack of demand. The new government will try to deal with this through increased public spending," Sogang University economics professor Kim Young-ick said in a phone interview. "For example, President Lee is projected to proactively implement the local currency system, even if it means incurring a fiscal deficit," Kim said. President Lee has expressed his commitment to promoting local currencies, or vouchers issued by regional governments that are valid only within designated areas, to revitalize the economy. The Bank of Korea nearly halved the country's 2025 growth forecast from 1.5% to 0.8% on Thursday, falling short of its potential growth rate estimated to be around 2%. Over the past three decades, the Korean economy has failed to achieve 1% annual growth only three times: in 1997 amid the Asian financial crisis, in 2009 because of the global financial turmoil, and in 2020 during the virus pandemic. "As a mid- to longer-term goal, President Lee is projected to jack up the country's growth potential by underpinning productivity. One effective approach would be to fully take advantage of artificial intelligence-powered systems," Kim said. Lee Phil-sang, an adviser at Aju Research Institute of Corporate Management and former Seoul National University economics professor, worried that President Lee would come up with populist policies at the expense of the country's fiscal health. "Rather than trying to improve South Korea's economic fundamentals through such measures as deregulation, President Lee is feared to just increase government spending," Lee said. "Such stimulus policies may have a short-term effect. But it would not make a big difference in the long run. Instead, such an approach may result in a steep rise in public debt. I am concerned that President Lee appears indifferent to rising debt," he said. During last month's election campaign, President Lee said that the government should not overly worry about sovereign debt. "There are people saying ignorant things like that the country must never go into debt because the national debt has exceeded $730 billion," he said. "But if the government doesn't spend money during times like this, then when will it ever?" he asked. "Compared to our annual gross domestic product, the government debt is quite low at less than 50%." President Lee also has been a prominent advocate of universal basic income, which is designed to provide all citizens with a guaranteed minimum level of income. During the 2022 election campaign, when former President Yoon defeated then-candidate Lee, the latter proposed an annual payment of around $180 per person with the five-year goal of raising it to $730. At the time, the idea also faced criticisms of its financial feasibility.
