Profit sharing proposal
Joint efforts needed to ease social polarization
Ruling Democratic Party of Korea (DPK) leader Rep. Lee Nak-yon has proposed a "profit-sharing" system to help ease social polarization amid the COVID-19 pandemic. On Monday, he made the proposal during the party's Supreme Council meeting, saying that it is urgent to tackle deepening inequality caused by the coronavirus outbreak.
Lee stressed the need for good-performing businesses to share their profits with small- and medium-sized enterprises (SMEs) hit by the unprecedented public health crisis. His proposal appears to be a radical measure under a free market economic system. That's why the conservative opposition People Power Party (PPP) is strongly against Lee's idea.
But it is not impossible to initiate such a profit-sharing formula. Even before the outbreak of COVID-19, American firms, including GM, Ford and Hewlett-Packard, were setting such a system in motion. Profit sharing is a more widely accepted concept in European countries. There is no reason why South Korea should not try this to usher in a more inclusive society.
For instance, conglomerates such as Samsung, SK and LG enjoyed handsome profits last year as their semiconductor and electronics businesses saw an unexpected boom despite the pandemic. Also delivery app operator Baemin of Woowa Brothers and mobile payment service KakaoPay have shown remarkable performances by taking advantage of the "contactless economy" amid social distancing and quarantine measures.
According to Lee, those firms can share their profits with coronavirus-battered subcontractors in return for tax benefits and low-interest loans. They can help those in dire need by providing financial support, increasing supply prices and lowering commissions. This could create a win-win strategy between conglomerates and SMEs as well as between prime contractors and subcontractors. It could also benefit consumers.
As Lee pointed out, profit sharing is required to narrow the income and wealth gap in every sector of our society. This disparity has widened particularly due to the pandemic. In order to prepare for the post-COVID-19 world, the country needs to institute a set of measures such as the profit-sharing system to help all players enjoy a fair share of the economic pie. Otherwise, we will not be able to solve the problem of social polarization, nor promote social solidary and national unity.
Lee's proposal is similar to President Moon Jae-in's campaign promise to introduce "cooperative profit sharing" between large businesses and SMEs. Moon, however, failed to make good on his commitment in the face of strong opposition from large corporations and conservative politicians.
Now is the time for the rival parties to engage in an active debate along with businesses, civic groups and unions on how to bring profit sharing into practice. Most of all, they should go all-out to reach a consensus; while the DPK and the government need to present detailed plans on how to implement it. This is easier said than done. But no effort should be spared to make Korea a better society after overcoming the coronavirus.
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