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Weakening industrial competitiveness endangering Korean economy, business groups tell DP candidate Lee

Published: 08 May. 2025, 18:22 Updated: 08 May. 2025, 18:24

Korea Chamber of Commerce and Industry (KCCI) Chairman Chey Tae-won, left, and Democratic Party presidential candidate Lee Jae-myung speak at a roundtable hosted by Korea's five major business groups at the KCCI's headquarters in Jung District, central Seoul, on May 8. [NEWS1]

The heads of Korea’s five major business federations convened with Democratic Party presidential candidate Lee Jae-myung on Thursday, warning that weakening industrial competitiveness has put the Korean economy at risk. They urged the government to prioritize the discovery of new growth engines.

Lee emphasized the pivotal role of the private sector at the roundtable held at the Korea Chamber of Commerce and Industry (KCCI) in central Seoul, saying the days of government-led planning are “over.”

“The era of the government leading the economy and industry is over,” he said in his opening remarks. “Businesses are at the heart of revitalizing the economy. It is critical to design and implement administration from the perspective of end users.”

The business leaders echoed a shared concern that the nation’s economic momentum is fading due to structural weaknesses in its industrial base.

Ryu Jin, chairman of the Federation of Korean Industries, warned that Korea’s projected growth rate may fall below 1 percent this year, not as a temporary slump but as a structural concern.

“The core of this crisis lies in the erosion of industrial competitiveness,” Ryu said. “We must foster new sectors like aerospace, artificial intelligence, robotics and biotech. The government must invest in infrastructure and ease tax burdens to promote corporate investment. We also need swift structural reforms in struggling industries like petrochemicals.”

From left: Choi Jin-sik, chairman of the Federation of Middle Market Enterprises of Korea; Yoon Jin-sik, chairman of the Korea International Trade Association; Chey Tae-won, chairman of the Korea Chamber of Commerce and Industry (KCCI); Democratic Party presidential candidate Lee Jae-myung; Sohn Kyung-shik, chairman of the Korea Enterprises Federation; and Ryu Jin, chairman of the Federation of Korean Industries pose for a photo at the KCCI's headquarters in Jung District, central Seoul, on May 8 following a roundtable. [JOONGANG ILBO]

KCCI Chairman Chey Tae-won proposed deepening economic ties with Japan to expand the country’s economic footprint.

“This isn’t just about cooperation, it’s about building a community akin to the European Union,” Chey said. “Combined with Japan, Korea’s GDP could grow from under $2 trillion to a $7 trillion economy.”

He also emphasized the need to attract global talent.

“We need to bring in about 5 million skilled workers. Only if these ‘premium brains’ earn and spend well in Korea will the country grow properly.”

Lee welcomed Chey’s vision.

“I fully agree with Chairman Chey’s idea,” he said. Lee added that Korea must undergo a significant transformation toward advanced technology industries, particularly AI, while also nurturing renewable energy, culture and tourism, and biotech.

Calls were also made for labor reforms, including flexible retirement and working hours.

Sohn Kyung-shik, chairman of the Korea Enterprises Federation, questioned uniform extensions of the retirement age, noting that many firms still operate on seniority-based pay systems. He advocated for flexible options like postretirement reemployment.

Sohn also cautioned against rushing into a four-and-a-half-day workweek, saying it could undermine competitiveness and widen the gap between large and small firms.

“We ask that any such discussions respect the autonomy of labor and management,” he said.

Lee responded that flexibility and dialogue are key.

“We must negotiate a solution both [labor and management] can accept, and recognize that each industry and company faces different conditions,” he said.

“Some people worry I might unilaterally enforce this through an emergency decree, but that’s not how it works. Everything must go through dialogue and preparation.”

“This isn’t martial law,” he added. “You don’t need to worry about a sudden imposition.”

Democratic Party presidential candidate Lee Jae-myung speaks at a conference hosted by Korea's five major business groups at the Korea Chamber of Commerce and Industry's headquarters in Jung District, central Seoul, on May 8. [NEWS1]

The business community also called for stronger responses to the Donald Trump administration’s U.S. protectionist trade policies.

Yoon Jin-sik, chairman of the Korea International Trade Association, said three of four exporters surveyed recently had experienced canceled contracts or had tariffs passed onto them.

“We need a trade strategy that is pragmatic and flexible, based on national interests,” he said.

Choi Jin-sik, chairman of the Federation of Middle Market Enterprises of Korea, called for reforms in education and inheritance and gift taxes to improve long-term competitiveness.

At the end of the meeting, the five business associations presented Lee with a joint policy proposal containing 14 agenda items across four key areas: growth drivers, emerging industries, economic territory expansion and foundational support for revitalization.

BY CHOI SUN-EUL [[email protected]]