{"id":2209052,"date":"2025-04-08T13:54:33","date_gmt":"2025-04-08T04:54:33","guid":{"rendered":"https:\/\/koreapro.org\/?p=2209052"},"modified":"2025-04-09T18:35:41","modified_gmt":"2025-04-09T09:35:41","slug":"how-businesses-can-manage-regulatory-uncertainty-in-post-yoon-south-korea","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2025\/04\/how-businesses-can-manage-regulatory-uncertainty-in-post-yoon-south-korea\/","title":{"rendered":"How businesses can manage regulatory uncertainty in post-Yoon South Korea"},"content":{"rendered":"
South Korea\u2019s Constitutional Court\u2019s <\/span>unanimous decision<\/span><\/a> to uphold President Yoon Suk-yeol\u2019s impeachment has triggered a snap presidential election within 60 days, creating a period of heightened political activity, potential social unrest and regulatory uncertainty.<\/span><\/p>\n While the main opposition Democratic Party (DP), led by Lee Jae-myung, has been quick to consolidate its position, pivoting toward a \u201c<\/span>centrist-conservative<\/span><\/a>\u201d stance to draw moderate voters, the conservative bloc remains fractured.<\/span><\/p>\n Meanwhile, the conservative parties, including the ruling People Power Party (PPP), are vying for influence, and this internal division within the conservative camp will significantly impact the political calculus in the coming election.<\/span><\/p>\n For businesses, the next 60 days will be crucial to sharpen their corporate strategies as they prepare for potential policy shifts during this transitional phase.<\/span><\/p>\n From left: PPP lawmaker Ahn Cheol-soo (Feb. 2, 2023), labor minister Kim Moon-soo (Nov. 2011) and Pastor Jeon Gwang-hoon | Image: Facebook<\/a>, Gyeonggi Province Office, Sarang Jeil Church<\/a>, edited by Korea Pro<\/em><\/p><\/div>\n NAVIGATING A FRACTURED RIGHT<\/b><\/p>\n The PPP \u2014 the traditionally dominant force on the right \u2014 now finds itself grappling with internal discord.<\/span><\/p>\n On one side are the pragmatists, represented by figures like <\/span>Ahn Cheol-soo<\/span><\/a>, who have called for Yoon\u2019s impeachment and a forward-looking approach. On the other hand, Yoon-loyalists, like labor minister <\/span>Kim Moon-soo<\/span><\/a>, who has <\/span>signaled<\/span><\/a> his interest in running for the top office now that Yoon has been formally removed, will likely be more proactive about their political ambitions going forward.<\/span><\/p>\n Adding to the conservative fragmentation is Pastor <\/span>Jeon Gwang-hoon<\/span><\/a>\u2019s far-right faction, which remains vocally supportive of Yoon and has positioned itself as the staunchest defender of conservative values. Jeon\u2019s influence on the far-right has drawn more radical voters away from the mainstream PPP, further weakening the party\u2019s ability to present a unified front.<\/span><\/p>\n This polarization not only diminishes the likelihood of consolidating conservative votes but also risks alienating moderate voters.<\/span><\/p>\n In contrast, the DP has already consolidated behind Lee Jae-myung. While questions persist about whether Lee\u2019s \u201ccentrist\u201d turn is a genuine ideological shift or merely a calculated move to broaden his appeal ahead of the snap election, Lee\u2019s unchallenged leadership within the party and his broad appeal among a plurality of South Korean voters make him the candidate to beat.<\/span><\/p>\n POLICY LANDSCAPE: WHAT TO EXPECT<\/b><\/p>\n With Yoon removed from office, Lee Jae-myung continues to present himself as a centrist-conservative. However, his track record as a progressive leader suggests that businesses should remain cautious and prepared for potential policy changes that could impact their operations.<\/span><\/p>\n Network usage regulations<\/span><\/i><\/p>\n A potential Lee administration might revisit the contentious issue of <\/span>network usage fees<\/span><\/a>. Proposals to make major content providers, including Google, Netflix and YouTube, pay fees to internet service providers for high data usage have previously sparked debate and resistance from global tech firms.<\/span><\/p>\n If Lee Jae-myung wins the presidency, his administration may come under pressure by progressive lawmakers to revive efforts to pass network fee legislation, which previously stalled due to political opposition and concerns over violating net neutrality.<\/span><\/p>\n For online retail platforms, which also rely on high data usage for their e-commerce and logistics operations, the potential introduction of network fees poses a considerable business risk.\u00a0<\/span><\/p>\n Companies should proactively assess their data management strategies to mitigate any financial impact. Building alliances with industry stakeholders can also help when it comes to advocating for balanced policies that do not disproportionately burden digital businesses.<\/span><\/p>\n Labor union members gather in Seoul to demand then-President Yoon Suk-yeol’s removal from office, April 4, 2025 | Image: Federation of Korean Trade Unions<\/a><\/em><\/p><\/div>\n Labor rights and minimum wage<\/span><\/i><\/p>\n Lee Jae-myung has consistently advocated for improved labor conditions, particularly for gig and platform workers. He has emphasized the need to address income inequality and enhance job security, signaling a push to increase the minimum wage and enforce stricter labor protections.<\/span><\/p>\n For companies employing large numbers of gig workers, such as logistics and delivery services, this presents a significant challenge. Increased payroll expenses could force businesses to reconsider staffing models.<\/span><\/p>\n Companies may need to transition more gig workers to regular employment to comply with new regulations, requiring strategic workforce planning and cost-benefit analyses.<\/span><\/p>\n Corporate taxes and fiscal policy<\/span><\/i><\/p>\n One of the central tenets of the DP\u2019s platform is addressing <\/span>social inequality<\/span><\/a>, and this often translates into resistance toward lowering corporate taxes.<\/span><\/p>\n While Lee Jae-myung has not explicitly outlined a tax increase plan during his centrist pivot, his social welfare policies indicate that the DP will continue to resist lowering corporate taxes despite conservative pressure.<\/span><\/p>\n For businesses, maintaining transparency in financial reporting and engaging with policymakers will be essential. Firms should also explore opportunities for tax credits and deductions related to compliance improvements and social contributions, which may offset potential increases.<\/span><\/p>\n Pension reform<\/span><\/i><\/p>\n The PPP and DP agreed on a <\/span>partial pension reform<\/span><\/a> in March. The deal set the income replacement rate \u2014 the percentage of a worker\u2019s pre-retirement income paid out as a pension \u2014 at 43%, slightly up from the previous 40%.<\/span><\/p>\n For businesses, the most immediate impact is the anticipated increase in the insurance premium rate to 13%, which will raise payroll costs and reduce disposable income, potentially dampening consumer spending.<\/span><\/p>\n Large firms may absorb the increase with minimal disruption, but small and medium-sized enterprises may face tighter margins. The proposed expansion of birth and military service credits will add further financial pressure, with the DP advocating for more comprehensive credits in exchange for accepting the 43% rate.<\/span><\/p>\n To mitigate risks, businesses should develop long-term financial strategies to account for increased pension liabilities and consider proactive engagement with industry associations to advocate for balanced reforms.<\/span><\/p>\n From left: Main opposition Democratic Party leader Lee Jae-myung meets with Samsung Electronics Executive Chairman Lee Jae-yong, March 20, 2025 | Image: Democratic Party of Korea<\/a><\/em><\/p><\/div>\n CORPORATE STRATEGY: ADAPTING TO UNCERTAINTY<\/b><\/p>\n The evolving political landscape requires businesses to adopt flexible and proactive strategies.<\/span><\/p>\n Stakeholder engagement<\/span><\/i><\/p>\n Proactive stakeholder engagement is critical during this transitional period. Companies should establish open lines of communication with government agencies, business associations and industry advocacy groups to stay informed about policy developments.<\/span><\/p>\n Engaging in dialogue with policymakers can also help businesses convey their perspectives on proposed regulations, advocating for balanced measures that protect both workers and corporate interests.<\/span><\/p>\n Participating in industry coalitions will enable companies to present a united voice on key issues, particularly those related to labor reform and digital regulation. By aligning with other stakeholders, businesses can increase their influence in shaping policies that directly impact their operations.<\/span><\/p>\n Operational flexibility<\/span><\/i><\/p>\n Businesses must build adaptive frameworks that can accommodate shifts in the regulatory environment. For example, logistics companies should prepare for potential disruptions stemming from stricter labor laws by diversifying their workforce strategies, incorporating both gig and permanent workers.<\/span><\/p>\n Investing in technology that enhances flexibility, such as automated compliance monitoring and adaptive supply chain management systems, can also help companies respond to rapid changes.<\/span><\/p>\n Companies should also conduct stress tests to assess how changes in taxation or labor costs could affect their financial health. Identifying vulnerabilities in advance allows for preemptive adjustments, reducing the risk of sudden financial strain.<\/span><\/p>\n Main opposition Democratic Party leader Lee Jae-myung presides over a party meeting, April 7, 2025 | Image: Democratic Party of Korea<\/a><\/em><\/p><\/div>\n PREPARING FOR THE NEXT ADMINISTRATION<\/b><\/p>\n