Pledges by Major Presidential Candidates on the Economy, Labor, and Welfare

1) Economic Issues

Regarding economic growth, the candidate for the Minjoo party of Korea, Moon Jae-in, suggests a policy of ‘wage-led growth’ while the People’s Party candidate, Ahn Cheol-soo, emphasizes one of ‘fair growth’

– Moon has pledged to shift economic paradigm to wage-led growth and implement aggressive financial policies.

– Ahn has pledged to strengthen the foundation for economic growth through establishment of a fair market order.

Both candidates emphasize ‘economic democratization’, but take different approaches.

– Moon has proposed strict regulations to pursue conglomerate reform.

– Ahn seeks to reform large companies in terms of economic structure as a way to eliminate unfair business.

The candidates have similar stands on reforming corporate governance and strengthening fair business, but have slight differences on policy priorities.

– Moon has prioritized conglomerate reform more than Ahn has, by introducing strict regulations for the 10 largest companies.

– While Ahn emphasizes reforming corporate governance as well, he has placed more emphasis on independence of the Fair Trade Commission (FTC).

2) Labor & Employment Issues

The candidates have similar regulatory positions on labor policies, but their policy priorities in relation to job creation differ.

– Moon has pledged to artificially create jobs in the public sector and introduce regulatory labor policies to protect non-regular workers.

– Ahn has taken a similar stance on labor policies, but has said that jobs should be created in the private sector, not in the public sector.

[Table 1] Presidential Candidate Pledges on Economic Issues

	Moon Jae-in	Ahn Cheol-soo
Policy priorities	Job creation led by the public sector	Decent job creation through growth
Reduction of working hours	Observe 52 hour work week, including work on holidays and weekends	Include work on holidays and weekends as extended work Reduce working hours for workers in their 30s and 40s
Reduction of non-regular workers	Use regular workers for constant and continuous work	Put restrictions on the use of non-regular workers
Prohibit use of non-regular workers for safety-related work	Directly hire regular workers	Directly hire regular workers
Prohibit discrimination against non-regular workers	Observe principle of equal pay for work of equal value	–
Restrictions on in-house subcontracting	Decrease illegal dispatch in the 10 largest companies Primary contractors and in-house subcontractors to share responsibility as employers	–
Protection of workers in special types of employment	Secure the three labor rights Apply social insurances	Consider workers in special types of employment as employees (Including domestic workers) Apply industrial accident compensation insurance and employment insurance
Increase minimum wage	Increase minimum wage to KRW 10,000 (USD 8.80) per hour by 2020	Increase minimum wage to KRW 10,000 (USD 8.80) per hour within the president’s 4-year term
Job creation in the public sector	Create 810,000 jobs in the public sector through expansion of civil service and conversion to regular employment status	Introduce job-based regular employment status
Job creation in the private sector	Create 500,000 jobs through reduction of working hours and 390,000 jobs through urban restoration projects	Construct an employment-friendly industrial structure, such as promoting new growth industries and SMEs
Youth employment	Promote youth employment quota by requiring companies with more than 300 workers to hire enough youth to equal at least 3-5% of their new employees on an annual basis Support SMEs who hire additional workers (provide entire wage of a third new employee for 3 years after SMEs hire 2 new youth employees as regular workers)	Introduce the youth employment quota for 5 years (until 2021) Give KRW 500,000 (USD 437) monthly to young workers for 2 years who are employed in SMEs (guarantee 80% of wages level paid by large companies)
Employment of women	Enforce annual leaves and leaves of absence for expectant mothers Introduce flexible working systems	Enforce annual leaves and leaves of absence for expectant mothers Expand flexible working hours Introduce public disclosure system of wages by gender
Others	Promote the use of ‘blind recruitment’ which does not require job applicants to give the name of the university from which they graduated	Reform job training systems through lifelong learning programs

The candidates have the same position on the reduction of weekly working hours to 52 including work on holidays and weekends, and both propose regulatory policies to protect non-regular workers and other vulnerable employees

– Each candidate has similar labor pledges which would place greater burden on enterprises in terms of production activities and workforce management.

– Specifically, both propose hiring regular workers directly for safety-related work. Moon proposes the use regular workers for constant & continuous work, while Ahn plans to further restrict the use of non-regular workers.

Both candidates have similar positions on strengthening work-family reconciliation and financially assisting SMEs hiring young workers

– In order to boost employment in SMEs, Moon plans to subsidize the entire wage of third employees for 3 years for SMEs who hire 2 new youth employees as regular workers. For his part, Ahn has proposed giving KRW 500,000 (USD 437) per month for 2 years to youths employed by SMEs.

– Both candidates have proposed policies to strengthen work-family reconciliation such as by increasing benefits for maternity leave and expanding paternity leave, both of which would further burden enterprises.

3) Welfare Issues

Both candidates have taken the same position regarding welfare policies, pledging to increase the State’s responsibility and revamp the current welfare system. However, they have different approaches: Moon will increase government spending while Ahn will seek structural reform.

– Moon has pledged to increase the State’s responsibility to address the nation’s low birth rate, social polarization and aging population

– Ahn has vowed to combine selective and universal welfare schemes and enhance the State’s responsibility as well, by reforming the current system

[ Table 2 ] Presidential Candidate Pledges on Welfare Issues

	Moon Jae-in	Ahn Cheol-soo
Policy priorities	Strengthen the State’s responsibility by increasing government spending	Reform welfare system through a combination of selective and universal schemes
Childcare	Introduce a child benefit
Childcare	Cover full expenses for preschool programs for children aged 3 ~5 Provide financial aid for a 3rd child’s care, education and medical care Offer childbirth support to uninsured women through the employment insurance scheme	Change public education system to include preschool courses
Education	Provide free public education from elementary to high school Cut university tuitions and offer interest-free student loans	Reform the current education system
Pension	Expand state-run childcare facilities and public rental housing utilizing the national pension fund Expand basic pension coverage and benefit amount Exercise voting right of the National Pension Service for invested firms	Expand basic pension coverage Exercise voting’s right of the National Pension Service for invested firms
Medical	Provide full care for persons suffering from dementia Offer free medical treatment to children aged 15 and under Expand support for infertility treatment to all people	–
Youth	Introduce a youth jobseekers’ allowance	Provide vocational training support Offer financial assistance to youth working for SMEs
Others	Phase out the support obligation standards in the National Basic Livelihood Security system	Phase out the support obligation standards in the National Basic Livelihood Security system Revamp the current social security system Strengthen care service for vulnerable social groups

Neither candidate has announced detailed plans or financing arrangements. However, it is obvious that the burden on taxpayers and companies will grow even higher if these welfare policies are implemented.

– In their ‘10 major presidential election pledges’ submitted to the National Election Commission, it is difficult to figure out how they would secure the financial resources needed to cover such escalating welfare costs.

– Moon has announced a partial estimated budget: KRW 6.3 trillion (USD 5.5 billion) for basic pension, KRW 2.1 trillion (USD 1.8 billion) for child benefits and KRW 250 billion (USD 219 million) for the youth jobseekers’ allowance

– Ahn has said that he will secure the financial resources needed for his proposed social protections by improving management of budgets, tax expenditures, etc., without offering an estimate of the funds required to pay for his pledges.

4) The KEF’s Position

The KEF published a paper titled ‘Business Opinion on the Campaign Pledges for the 19th Presidential Election’ in which it analyzed each presidential candidate pledge and employers’ position on it.

○ The KEF also raised questions about the employment pledges, which depend greatly on job creation in the public sector and stressed that enterprises play leading roles in creating jobs in the private sector.

[ Table 3 ] The KEF’s Positions on Campaign Pledges for the 19th Presidential Election

Issue	Pledge	KEF position
Jobs	Introduce a youth employment quota in the private sector	This runs against a market economy and the constitution, and may further aggravate the employment situation
	Ban employers from requiring job applicants’ personal information	It is desirable to allow autonomous and competency-based hiring by companies
	Strengthen regulations on maternity leave	Korean laws and regulations already provide sufficient institutional protection. It is desirable to seek better ways to implement them
Labor	Regulate the use of fixed-term and subcontracted workers	Concerns exist that inflexible employment and personnel management would result in more conflict and confusion at workplaces
Labor	Reduce working hours	Measures are needed to minimize the repercussions of working hour reductions and such changes should be made gradually and carefully
Social protections	Promote public investment utilizing the National Pension fund	There are concerns that the profitability and stability of the National Pension fund would be undermined
Social protections	Exercise voting right of the National Pension Service for invested firms	It is desirable to exercise stockholder’s right based on the fund’s profitability and stability

■ The KEF also plans to announce ‘The KEF’s Policy Proposals’ on labor and employment issues.

The KEF will call on the new administration to lead a golden era of job creation through ‘employment-first policies.’ We will suggest 46 policy proposals on 5 agenda items: ① Revitalize the market economy, ② Increase fairness and flexibility in the labor market, ③ Promote mutually-beneficial relations between labor and management, ④ Introduce effective employment policies, and ⑤ Create sustainable social protection and safety systems.

[ Table 4 ] The KEF’s Policy Proposal for the New Government

Agenda	Policy Proposal
Revitalize the market economy	Establish a free market economy; shift the paradigm of regulation reform; reform childcare and the education system; facilitate growth in the service sector, etc.
Increase fairness and flexibility in the labor market	Pass a Labor Contract Act for individual labor relations; create an environment for shorter working hours and flexible regulations; ease restrictions on changes to working conditions; ease regulations on the use of fixed-term and dispatched workers, etc.
Promote mutually-beneficial relations between labor and management	Allow substitute work during industrial actions; prohibit any occupation of facilities and workplaces; improve the procedures for strike voting; extend the terms of collective bargaining agreements; reform the Economic and Social Development Commission, etc.
Introduce effective employment policies	Require policy assessments of employment impact; push ahead with youth-centered employment policies; create working conditions to support ‘work-life balance’; foster young talent for new industries, etc.
Create sustainable social protection and safety systems	Establish the principle of selective welfare; increase government share of expenditures on welfare to improve financial soundness of the programs; develop a safety management system, etc.

< Appendix > Major Pledges of the Presidential Candidates

1. Top 10 pledges

Moon Jae-in	Ahn Cheol-soo
1. Promote job security by creating more jobs in the public sector, reducing working hours, and introducing a special act prohibiting discrimination against non-regular workers	1. Strengthen national security, resume 4-way and 6-way alliance, and promote peaceful Korean reunification
2. Reform authority by establishing a new investigative agency for corruption among senior government officials, and transferring to the National Assembly the Board of Audit and Inspection’s authority to inspect accounts	2. Renovate education system, science, and entrepreneurship by abolishing the Ministry of Education and reforming the school system, fostering outstanding individuals in preparation for the 4^th industrial revolution, and establishing an environment for converging technology
3. Promote anti-corruption and conglomerate reform by introducing multiple derivative suits, formation of a government-wide committee to monitor abuse of power by corporations, and restricting pardons for economic crimes, etc.	3. Establishing a fairer economy by restricting pardons for corporate criminals, introducing multiple derivative suits, actively exercising the government’s right as a stockholder of the National Pension
4. Strengthen national security by eliminating corruption in the defense industry, strengthening the military to respond appropriately to North Korea’s nuclear threat within the next presidential term, and boost morale in the armed forces	4. Reduce wage gap and job insecurity through a youth job guarantee, regular jobs for specific duties, and reduction of working hours to 1800/year
5. Support youth by enhancing the youth employment quota and providing public rental housing (from a special fund), and legislating a new act to protect temporary workers	5. Promote integration by establishing a new investigative agency for corruption among senior government officials, introducing a ‘people’s initiative’ to propose new laws or amendments, and transferring to the National Assembly the Board of Audit and Inspection’s authority to inspect accounts
6. Promote gender equality by legislating ‘equal pay for equal value of work’, and paying maternity allowances even to women who have not subscribed to employment insurance	6. Enhance the social safety net by enhancing leave periods and benefit amounts for maternity leave and family-care leave, enhance the basic pension and introduce a child benefit
7. Enhance the benefits for senior citizens by making uniform basic pension payments of KRW 300,000 (USD 265)/month, and double the wages for those in senior employment programs	7. Reduce accidents by increasing punitive compensation for damages in cases of hazardous substances, and relax customer’s obligation for proof
8. Assist with childcare by enhancing leave periods and benefit amounts for childcare leave, and introducing flexible working hours, a child benefit, and laws to limit overtime work	8. Promote gender equality by introducing a wage disclosure system, enhancing leave periods and benefits for childcare and paternity leave
9. Support micro businesses and self-employment by establishing a ministry for SMEs and venture capital firms and regulating shopping complexes owned by large enterprises	9. Strengthen the eco-friendly energy industry by fostering related new growth engines, SMEs, venture capital firms, and cultural industry firms
10. Reduce accidents by introducing punitive compensation for damages and class action suits	10. Guarantee food security by fostering IT convergence within the agricultural and fishing industries

※ The two candidates listed their 10 most important pledges upon the request by the National Election Commission

2. Pledges related to non-regular/In-house subcontracted & independent workers

Moon Jae-in

Ahn Cheol-soo

Reduce non-regular jobs

Convert employment status of surveillance/intermittent workers engaged in regular and continuous jobs to regular employment
Directly hire regular workers engaged in health and safety jobs
Convert employment status of non-regular workers in the public sector to regular employment

Prohibit discrimination against non-regular workers

Equal pay for equal value of work

Reduce illegal dispatch in the top 10 conglomerates

Assign primary contractor responsibility as an employer with subcontractors

Responsibilities include managing working conditions, occupational safety and health, and participating in collective bargaining

Guarantee the 3 labor rights to the self-employed and coverage by social insurance

Reduce non-regular jobs

Restrict the number of jobs which can be filled by non-regular workers
Convert employment status of non-regular workers in the public sector to regular employment
Penalize companies with a high percentage of non-regular workers (of total workforce) by engaging in less public procurement from such companies

Directly hire regular workers engaged in health and safety jobs

Recognize the self -employed (including domestic workers) as ‘workers’, include them in industrial accident compensation and unemployment insurance programs

3.Reducing working hours

Moon Jae-in	Ahn Cheol-soo
Include holiday working hours in statutory overtime working hours Strictly observe statutory working hours (40 hours per week, 12 overtime work hours per week) Create 500,000 more jobs by reducing working hours Make mandatory the use of annual paid leave days Reduce working hours of parents with a preschool-age child (from 10 am to 4 pm, without reducing wages)	Include holiday working hours in statutory overtime working hours Strictly observe overtime work limitations Reduce working hours for workers in their 30s and 40s, since workers in that age group tend to work longer hours

4. Increasing Minimum wage

Moon Jae-in	Ahn Cheol-soo
Increase minimum wage to KRW10,000 (USD 8.80) per hour	Increase minimum wage to KRW 10,000 per hour within the presidential term

5. Stricter regulations on dismissals for managerial reasons & guaranteeing employment for subcontracted workers when primary contractors change

Moon Jae-in	Ahn Cheol-soo
–	Stricter observation of current laws

6. Revision of the TULRAA (Trade Union & Labor Relations Adjustment Act)

Moon Jae-in	Ahn Cheol-soo
Through consultation between labor and management	Through tripartite consultation (labor, management, government)