New leader faces tall task to narrow gap between small and big companies

By Park Jae-hyuk

President-elect Moon Jae-in pledged to foster small- and medium-size enterprises (SMEs) throughout his election campaign, specifying his plans at the Korea Federation of Small and Medium Business (K-Biz) office on Yeouido, Seoul, last month.

Moon from the Democratic Party of Korea (DPK) is seeking to promote the growth of SMEs through larger financial support from the government.

His promises can be summarized into three major policies ─ establishment of a ministry for SMEs, subsidies for small firms hiring young employees and stricter punishment against conglomerates abusing small contractors.

Moon has pointed out that too many ministries deal with tasks related to SMEs and that the Small and Medium Business Administration (SMBA) lacks the power to propose bills related to SMEs.

So he plans to create a so-called Ministry of Small Businesses and Venture which will be able to make laws for SMEs, startups and small retailers.

The ministry will pioneer the Fourth Industrial Revolution as well, according to his election camp.

The president also aims to relieve both labor shortages at SMEs and youth unemployment through subsidies to small firms that hire young workers.

SMEs employ 88 percent of salaried workers in Korea, but young jobseekers have remained reluctant to work for them due to poor working conditions. SMEs themselves have also struggled to pay reasonable salaries amid financial setbacks.

Moon vowed that if small firms recruit three new employees in permanent positions, the new government will pay full wages for the third worker for three years.

“The government will pay wages for 50,000 people each year as small companies hire 150,000,” he said. “If the wage gap narrows between conglomerates and SMEs, young people will want to work for small firms.”

Moon also promised to strengthen penalties against large corporations that abuse their smaller subcontractors. He said the next government will introduce stricter punitive measures to remove dubious business practices by chaebol.

“It is time to discard conglomerate-oriented growth strategies,” Moon said.

In addition, he promised “three-time” financial support for bankrupt venture entrepreneurs, as well as a larger state R&D budget and deregulation for small companies.

In response to Moon’s electoral commitments, over 14,000 small and medium-sized business leaders declared their support for him, Monday, at the DPK headquarters. They stressed that Moon’s landslide victory is necessary to push ahead his policies.

Critics, however, said Moon will unable to secure finances for the increased support for SMEs. Also, he should respond to an expected backlash from large firms, which have been painted as misbehaving by the presidential hopeful.