Korea’s top economic policymaker said Thursday the government will make sure the major stakeholders of companies undergoing restructuring share in the burden of the revamp of the troubled shipping and shipbuilding industries.
“Spearheaded by creditors, we will take their liquidity conditions and industry outlook into account, but (the government will) manage and supervise (the process) in accordance with a pain sharing principle of the parties immediately interested in the companies.” said Finance Minister Yoo Il-ho at a meeting of economy-related ministers in Seoul.
Finance Minister Yoo Il-ho (Yonhap)
Yoo urged the companies to “accelerate efforts” to advance the reform with a mindset like “having no promise of tomorrow without structural revamp.”
“To maintain short and mid-term economic recovery momentum, the structural reform is necessary along with comprehensive examination of economic conditions at home and abroad,” he said.
As preemptive measure against jitters in the financial market that can occur during restructuring, the government will come up with capital expansion plans for policy banks and a backup system for unemployment.
His comments come as an array of companies in the shipbuilder and shipping sectors pledged to shed thousands of jobs and cut costs as part of restructuring proposals to their creditors since April.
The country’s once-formidable industries have racked up massive losses, as they are crippled by mismanagement, slowing global demand and competition from Chinese rivals.
The minister said the government will attract voluntary business reorganization of sectors that face oversupply issues by completing proceedings to legislate a bill intended to revitalize corporate activities by June.
During the meeting, he criticized labor unions of some public financial companies that are protesting against the introduction of a performance-based pay scheme as part of self-help programs.
“Some unionists are opposed to the adoption of the performance-based pay system but they only try to keep their vested rights such as an automatic wage increase by seniority-based salary system,”
The move is widely seen as part of the government’s stepped-up drive to urge the Korea Development Bank and the Eximbank Korea to make restructuring moves before they get a cash injection from the government as a preemptive response to possible heavy losses from financially troubled industries.
Yoo also provided plans for the revamp of the financial service system such as fostering a mega-sized investment bank, refurbishing the initial public offering system, overhauling the stock exchange and revising the law for Internet-only banks.
By Park Han-na (hnpark@heraldcorp.com)