Yoon Suk Yeol promises easier ways to pass down the family business

Industry

Published: 21 Mar. 2024, 10:32

Yoon Suk Yeol promises easier ways to pass down the family business

President Yoon Suk Yeol, third from left, and the heads of the country's major conglomerates, including Samsung Electronics Chairman Lee Jae-yong (fifth from left), SK Group Chairman Chey Tae-won (second from left), Hyundai Motor Executive Chair Euisun Chung (sixth from left) and LG Chairman Koo Kwang-mo (seventh from left), attend a ceremony to mark the 51st Commerce and Industry Day at a convention center in Seoul on March 20. [JOINT PRESS CORPS]

President Yoon Suk Yeol vowed Wednesday to improve the conditions for family business successions as he pointed to local conglomerates' reluctance to grow their value out of fear of having to pay a larger inheritance tax.

Yoon made the promise during a special lecture marking the 51st Commerce & Industry Day in front of some 1,000 people, including the chief executives of large family-run conglomerates, such as Samsung Electronics, Hyundai Motor Group and LG Group.

"Many companies in our country are moving past the first generation to the second and third generations, but do not dare to value-up their business value or improve employees' working conditions, let alone innovate, because of concerns about inheritance taxes," Yoon said during the event held at 63 Convention Center in Seoul.

"The government will actively improve related systems so that there will be an increase in long-lived businesses through smooth family business successions, and by doing so stabilize employment and enable continued economic growth," he said.

Yoon cited the example of Germany, where he said a family business succession system is in place to allow businesses to focus solely on innovation, and where the maximum inheritance tax rate is 30 percent, compared with Korea's 50 percent.

He also vowed to continue his push for labor reforms, such as making the labor market more flexible in line with changes in the industrial structure.

The labor sector is "definitely not in a normal situation," he said, referring to what he described as "ideologically armed labor union cartels with vested interests" carrying out various illegal practices at work sites.

Yoon said the government will keep the 52-hour working week system in place but devise measures to introduce more flexibility depending on the sector. He also suggested changing wage systems to compensate fairly based on performance, not seniority, and diversifying working models to include working from home and hybrid work.

Yonhap

BY PARK EUN-JEE, YONHAP [park.eunjee@joongang.co.kr]