Outcries reverberate as industrial complexes come to a grinding halt

In the Incheon Industrial Complex, primarily housing device and machine manufacturers, a car parts company declared bankruptcy in October 2023, leaving its six-story building darkened. The news triggered widespread concern among other auto parts companies. Many express the struggle of coping with escalating raw material costs and interest rates. Some contemplate laying off half of their employees this year, while others ponder the optimal time to close their businesses.

Nationwide, the lamentations of companies grappling with feeble exports and economic decline echo. In Busan City, revenues from the logistics sector, the city's vital economic support, nearly halved compared to last year. The shipping and machinery industries are experiencing a sharp decline in profitability. Regions, including Pyeongtaek, Hwaseong, Ulsan, and Yeosu, which are heavily reliant on foreign trade, bear the brunt of the global economic recession. Key players in our export-driven manufacturing industry find themselves profoundly shaken.

Based on a survey conducted by The Dong-A Ilbo in collaboration with the Korea Chamber of Commerce and Industry, seven out of ten businesses indicated that their present circumstances mirror or are worse than those during the 2008 Global Financial Crisis. There's a prevailing sentiment that a wave of bankruptcies is imminent next year if no action is taken. Early indicators are evident—this year's nationwide bankruptcy filings reached 1,363 in October, the highest since official statistics began in 2013.

Despite the business sector's outcry, the government and politics remain indifferent. Regulations to stifle firms, including the Serious Industrial Accidents Punishment Act and the 'Yellow Envelope Act,' which limits companies from seeking compensation from employees for strike-related damages - are in the pipeline. Meanwhile, there's no news of deregulation for businesses. The long-pending Corporate Restructuring Promotion Act bill expired a month ago due to neglect from the National Assembly. A recent survey by the Korea Federation of SMEs, covering about 300 small-to-medium manufacturers, revealed that only 3.4% of respondents actually 'feel' the government's deregulation efforts.

SMEs constitute 99% of all operating companies and contribute to 88% of nationwide employment, making them the bedrock of Korea's economy. If these foundational elements are disrupted, the nation's economic recovery remains uncertain. The government must systematically address pressing issues these companies face, such as heavy regulations, staff shortages, high taxes, and financial support. Despite some signs of economic revival, including export rebounds, there is no room for complacency. SMEs, grappling with daily challenges, require additional time and support to sustain themselves.