Half-baked policies

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Half-baked policies



*The author is an industrial news reporter of the JoongAng Ilbo.

“A portion of the wage increase for large corporations will be subsidized for salary increases and bonuses for employees at some partner companies.”
The fourth Commission for Corporate Partnership commenced this month and proposed a wage solidarity model on April 17. The commission also proposed various models for collaborative growth with the goal of reducing the wage gap between large corporations and small and mid-sized businesses.

But it did not go further. The size of businesses that the solidarity model would apply to wasn’t specified. Considering the social influence of the commission, the win-win model looks fancy but lacks detail.

This year, a growing number of measures related to small and mid-sized companies had been announced. However, many policies lack detail and have little impact. Just like the plan from the Commission for Corporate Partnership, a civilian consultative group, government policies also lack specifics. The government announced a job plan for young people last year. Young workers getting hired at small and mid-sized companies will be subsidized with up to 10 million won ($9,357) a year for three to five years, but the government hasn’t addressed the issue of new hires getting paid more than existing employees.

The small and mid-sized companies’ R&D innovation plan announced by the Ministry of SMEs and Start-ups on April 16 is not much different. It includes terms like “improved response to the fourth industrial revolution” and “private sector and market-oriented agenda-setting,” but still lacks an action plan. It requires that 30 percent of government-funded R&D spending be used for payroll costs.

The owner of a small machine equipment company in Seongju, North Gyeongsang, said that the company struggles to hire researchers even with government subsidies as master’s degree and Ph.D. holders are reluctant to work outside Seoul.

In the past, university and government-funded research centers assisted technology development of small and mid-sized companies. But today, venture accelerators and companies specializing in R&D are also active. The Ministry of SMEs and Start-ups must reconsider the exclusion of funding for companies specializing in R&D that focus on specific technologies such as lactobacillus and cellular diagnostics in the course of policy design.

Among the 35,000 corporate research institutes in Korea, 96 percent are operated by small and mid-sized companies. However, many are short-lived and rely on funding from the government. Another job for the government is to select the ones with growth potential. Policy and regulations are fine, but unripe policies lacking detail can always turn into poorly thought out regulations.

JoongAng Ilbo, April 18, Page 29
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