Kim Jung-kwan Says Shareholders Should Join Bonus Profit-Sharing Talks

[Financial News]  
Kim Jung-kwan, Minister of Trade, Industry and Energy, said that an institutional mechanism is needed so that shareholders and investors, as well as labor circles and management, can take part in discussions over the distribution of operating profits tied to company bonuses. He also took a negative view of making bonuses a subject of labor disputes, saying that the rights of shareholders who bear investment risk are missing from the current discussion structure.
According to the Ministry of Trade, Industry and Energy on the 23rd, Kim said at a press briefing on the 22nd, "I do not think it is right if bonuses become a subject of labor disputes," adding, "From the perspective of labor circles, they will try to turn it into an issue one way or another."
He said, "When it comes to operating profits, it is not only management and the trade union that are involved, but also investors," and added, "Investors enter with the expectation of possible losses, while workers enter with the basic premise that their wages are guaranteed, so the risk is completely different."
He went on to say, "Compensation for investors who take risks should be secured differently from the issues between the trade union and management," and noted, "From the perspective of domestic and overseas investors and shareholders, there is no room to participate in this discussion framework." He added that "institutional improvements are needed in this area."
Asked about how to use the extra tax revenue, Kim declined to give a specific answer, saying, "If I say where it will be used, it could lead to misunderstandings." He stressed, however, that investment from a medium- to long-term perspective is necessary to strengthen resource security.
He said, "During wartime, people say resource security is important, but as time passes, the mood can shift to asking why money should be spent there," adding, "One of our chronic problems is a short-term outlook, and we need to come up with measures from a long-term perspective."
On semiconductor investment, he said existing planned investments should be accelerated, while the government should also consider securing additional production bases. Kim said, "To secure an early lead in the market in response to the rapid expansion of the semiconductor market, it is necessary to move ahead with the parts that were already planned for investment as quickly as possible." He added, "There is also the question of whether that alone will be enough. I think we may need a new semiconductor complex."
Regarding the end date of the oil price cap, Kim said it is still difficult to make a final decision, citing three conditions: the end of the war, normalization of the Strait of Hormuz, and a return of global oil prices to prewar levels. He said, "The first and second conditions are under way, but the sluggish pace continues, so I have not been able to make a final decision," adding, "Current oil prices have fallen from their wartime peak, so I think there is reason to lower the cap itself."
On the European Union's plan to reduce its steel tariff-rate quota (TRQ), he explained that consultations are under way to avoid applying a uniform reduction rate to Korean steel. Kim said the EU has confirmed that even if it cuts the overall quota, it will not mechanically apply the same level of reduction to Korea, calling it "a major achievement for our industry."
He added, however, "It is too early to talk about numbers because the discussions are still ongoing," drawing a line at disclosing the specific scale of the cut. The government plans to announce support measures for the steel industry around the time of the EU's final decision, expected at the end of this month or early next month.
aber@fnnews.com Park Ji-young Reporter