The biggest burden for foreign-invested companies in Korea is the government's labor policies, such as the reduction of the maximum statutory working hours and the hike in minimum hourly wages, a survey has found.
The companies also advise the government to ease regulations and refrain from rushing in introducing new regulations in order to improve the management conditions for them.
The survey was conducted by pollster Research & Research (R&R) on behalf of the Korea Economic Research Institute (KERI). It polled 120 foreign investment firms, which have more than 100 employees in South Korea, about the business environment.
Out of the total, 65 percent of respondents said labor policies are the most daunting corporate polies, while 16.7 percent of them said tax policies, including the increase in taxation and the reduction of tax support, are the one. Moreover, the largest portion of respondents said the increase in labor costs is the biggest obstacle to create jobs with 53.3 percent, following the restriction of the use of temporary workers with 21.7 percent, the hike in tax burden with 10.8 percent and the youth hiring quotas with 8.3 percent.
Respondents said that there has not been significant improvements in management conditions in South Korea over the past five years. In particular, 27.3 percent of conglomerates with more than 500 employees said their business conditions got worse, while 13.6 percent of them said there were improvements.
In contrast, 23.6 percent of respondents considered “sufficient industrial infra” as the most competitive business area in South Korea. Domestic market took a back seat in terms of competitiveness with 17.8 percent, following taxation and burden charge with 14.2 percent, neighboring export markets with 12.6 percent and policy support with 10.7 percent.
For business expansion plans in the future, 56.7 percent of respondents said they would maintain the current trend. In short, they will wait and see the changes of enterprise management environment.
In regard to legislation related to business, which has been recently under discussion, 26.7 percent of respondents said the economic effects are not fully considered, though the policies directly affect business management. In addition, 24.2 percent of them said lack of communication with enterprises is another problem, while 23.3 percent said it is the speed of regulations that are beyond acceptability.
More than half of respondents said regulations are the most urgent policy to improve the business environment, such as the deregulation with 25 percent and the control of regulation speeds and ranges with 25 percent. Policy enforcement that fits global standards followed next with 23.3 percent and infrastructure establishment, including residential and education environment, with 10.8 percent.