[Editorial] A spider's web of regulations

Every previous government attempted to abolish or ease regulations.

It is true of the current government, too.

President Lee Jae Myung presided over the first "strategy meeting to rationalize core regulations" on Monday. He emphasized that his government's goal is to clear away a cobweb of regulations that impede corporate innovation and growth.

Lee vowed efforts to ensure this does not become empty rhetoric, saying that it must be very hard to run a business.

He also pledged to change unnecessary punishment provisions, saying that there were too many of them.

But, commonly known as the "Yellow Envelope" law, the amendment to the Trade Union and Labor Relations Adjustment Act was passed under this government. It is probably the worst regulation in the eyes of businesses.

The act restricts companies' right to claim compensation for losses caused by "illegal" strikes. It also allows labor unions of subcontractors to engage in collective bargaining with their main contractors, despite the fact that the two sides are with different companies.

Companies strongly opposed the bill and appealed to the ruling party several times for reconsideration, saying it would hinder their management and investment to the extent that they may have to consider relocating abroad. But the party ignored their appeals, pushing the bill through, and Lee signed it into law.

On the same day, the government announced a package of labor safety measures focused on strong sanctions against companies for industrial accidents at their workplaces, regardless of whether they were at fault.

The government will fine companies up to 5 percent of operating profit when three or more workers die from workplace accidents in a year.

The government will also revise industrial safety law to strip construction companies of their licenses when they are ordered to suspend work three or more times in three years due to fatal accidents.

Imposing fines — as percentages of operating profit at that, not as fixed sums — for unexpected accidents is a bone of contention. There will reportedly be a minimum fine of 3 billion won ($2.2 million), but the amount can increase sharply depending on earnings. That is too burdensome.

Most construction and manufacturing companies are just getting by, with operating profits that fall far short of 10 percent of sales. The number of companies in the red due to the recent recession is not small.

If slapped with fines of up to 5 percent of operating profit, mid-size or small enterprises may struggle to survive.

There are limits to the effectiveness of punishment in reducing fatal industrial accidents. Accidents will happen. There are many factors at play, including workers' disregard of safety regulations and foreign workers' language barriers. It can be argued that the economic sanctions to be introduced in spite of this are unnecessarily harsh.

Some bills being pushed by the Democratic Party of Korea are feared to aggravate the burden on companies if enacted.

The revision bill of the Commercial Act to expand the scope of directors' fiduciary duty from their companies to their shareholders was passed in July, inviting an outcry from businesses concerned about the prospect of an outpouring of litigation from shareholders. Yet the party went a step further, proposing an amendment bill to expand fiduciary duty even further to company workers.

It is hard for companies to grow when they are caught in a web of regulations and punishment.

South Korea's growth is falling close to zero percent as its companies lag behind in global competition. Taiwan is expected to move ahead of South Korea in terms of per capita gross domestic product this year for the first time in 22 years. The biggest factor eating away at Korea's competitiveness is probably its rigid regulations, such as the 52-hour workweek permitting no exceptions, even for R&D, where long hours are sometimes necessary.

The Lee government vows to remove unnecessary regulations, but regulations multiply and become stronger.

This is possibly due to the ruling party siding with laborers, who outnumber companies, to get their votes, and turning even their irrational demands into regulations. Unless it changes this stance, the government's promise to reform regulations cannot but ring hollow.