Gov’t gives breaks to factories on electric bills

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Gov’t gives breaks to factories on electric bills

The government will delay a planned increase of electricity prices for local industries as part of efforts by the Moon Jae-in administration to be more business friendly following the shortening of the workweek.

Paik Un-gyu, Korea’s minister for trade, industry and energy, said in a meeting with reporters in Sejong on Monday that the government will not increase the industrial electricity rates this year, retracting the ministry’s initial plan.

“We have heard concerned voices of the business community and we decided to reflect them in this issue and adjust the timing [of the increase],” Paik said. Korean companies are already facing major hurdles in their operations from the shortening of the maximum legal working hours as well as tensions in global trade.

The government implemented a 52-hour workweek starting this month for large companies, a 16-hour cut from the previous legal limit. It will be extended to smaller companies gradually.

Companies in sectors such as steel and semiconductors - major exporters for Korea - have expressed worries about heavier electricity bills because they use a substantial amount of electricity to run factories.

On Monday morning, Paik met with chief executives from 12 Korean conglomerates such as Samsung, Hyundai Motor Group, Posco and Hyundai Heavy Industries to listen to their requests of the government.

In the meeting, Paik vowed to ease regulations so that the companies could increase their investments. The executives of the companies, including Yoon Boo-keun, vice chairman of Samsung Electronics, reportedly told Paik that they are ready to invest.

“We will ask the companies to come up with projects that could increase the energy efficiency of their operations,” Paik explained.

Recent meetings between top government officials and business executives are seen as signals of a slight government shift to be more friendly to large conglomerates amid a deteriorating employment situation partly caused by a drastic increase in the minimum wage, which affected many small companies. Conglomerates have a bigger hiring effect in the economy than smaller firms - especially if government policies are favorable to them.

Earlier this month, President Moon Jae-in met with Lee Jae-yong, vice chairman of Samsung Electronics, during a trip to India at a ceremony celebrating the expansion of a Samsung factory.

The president asked Lee to create more jobs in Korea. It was the first time that the president had met with the heir of the Samsung empire after Lee was released from prison in February. Lee is appealing convictions in the influence-peddling scandal that brought down the Park Geun-hye administration.

A high-ranking official from the ministry said it is necessary for the government to maintain positive relations with private companies as they drive economic growth and create jobs. Another official, however, said the rate will have to rise eventually.

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