Businesses do not feel confident for the coming year due to uncertainties related to COVID, soaring cost of natural resources due to disruptions in global supply systems, employee demand for higher wages. Although the government claims that the economy is recovering at one of the fastest rates among advanced countries, companies view the growth rate of 4.0% as a mere recovery from the reverse growth of 0, 9% from last year.
With an interest rate hike set by the Bank of Korea in January and the Fed set to take place in March, many more hurdles lie ahead. If these measures absorb excess liquidity, pushing down property and stock prices, it could impact consumer confidence. Household disposable income in Korea would be severely affected, where many have bought real estate and stocks through aggressive borrowing.
Government and politicians should provide powerful incentives by introducing dramatic deregulations to stimulate investment and employment to help businesses overcome these challenges. The government, however, continues to undermine business confidence by advancing the Severe Accident Sanctions Act, which penalizes the CEO for unplanned workplace accidents. The two presidential candidates Lee Jae-myung and Yoon Suk-yeol support the idea of union leaders being involved in the board of directors of public institutions and recognize the director of union activities as working hours, known as leave system. These two changes are the ones that company management considers most worried about being introduced in the private sector.
Even the head of a large Korean company described the economic situation as “disheartening in the face of the cruel and dire circumstances” of intensifying trade tensions between the United States and China and rapid changes in the global network of China. Supply Chain. The government and presidential candidates should pay attention to why businesses are approaching the New Year with trepidation and focus on creating jobs instead of making empty promises to deal with the economy.