As the artificial intelligence (AI) industry experiences rapid growth, a debate is unfolding over the excess profits of advanced technology companies. Some argue for the establishment of a 'special purpose tax' to benefit the entire industrial ecosystem, while others advocate for a 'social solidarity investment' model based on corporate autonomy.
The Ministry of Employment and Labor held a forum on the theme of 'New Paths for Social Innovation in Line with AI Technological Innovation' on July 14 at the Peace and Park Convention Center in Seoul. This forum was proposed by Minister of Labor Kim Young-hoon shortly after Samsung Electronics reached a performance bonus agreement with its labor union in May, aiming to discuss profit distribution among large corporations.
During the forum, labor and management expressed opposing views. Lee Gye-rae, chair of the Youth Committee of the Korean Confederation of Trade Unions, stated, "The development of the AI industry could reduce job opportunities for workers. Therefore, the excess profits of semiconductor companies should be used to support those adversely affected by the AI industry," adding that it should be utilized to improve the working conditions of all workers within the semiconductor supply chain.
In response, business representatives maintained that these profits are a result of innovation and investment. Lee Sang-ho, head of the Economic Division of the Korea Economic Association, countered, "Profits are a reward for innovation and a market signal that drives investment and production. Viewing them solely as a distribution target distorts the efficient allocation of resources."
He further noted, "Companies bear the risk of failure even when success is not guaranteed. If all profits are shared, the incentive for innovation diminishes."
The discussion also highlighted the need for a special purpose tax to enhance industrial competitiveness. This tax would be levied on excess profits once labor, management, and government agree on the criteria for such profits.
Professor Jeong Heung-jun from Seoul National University of Science and Technology argued, "A special purpose tax is a form of social solidarity wage that fits our country's reality. However, it should also recognize corporate efforts. Therefore, it must be designed as a special tax used for specific purposes rather than a general tax."
He added that if the special tax is utilized for research and development (R&D) investments, modernization of industrial complexes, youth employment, and improving the welfare of subcontracted and small business workers, it could enhance overall industrial competitiveness.
Conversely, Professor Yoon Dong-yeol from Konkuk University advocated for social solidarity investment based on corporate autonomy. He argued that corporate profits should first be used to build innovative capabilities for the future, which would then contribute to creating an environment for mutual growth, benefiting the entire ecosystem.
Professor Yoon stated, "Korea's advanced companies are engaged in a life-and-death competition with the U.S. and China. We must not undermine the long-term R&D and capital investment momentum of companies. In the AI era, we should focus on growing together rather than merely sharing results."
He concluded, "When the profits of large corporations are utilized for future competitiveness rather than redistribution, the benefits of growth can be spread to small businesses, the youth, and local communities."
Professor Yoon also pointed out the ambiguity surrounding the definition of excess profits, noting, "Industries like semiconductors and shipbuilding are highly volatile. Defining temporary booms as excess profits and distributing them can lead to social conflict."
The Ministry of Employment and Labor held a forum on the theme of 'New Paths for Social Innovation in Line with AI Technological Innovation' on July 14 at the Peace and Park Convention Center in Seoul. This forum was proposed by Minister of Labor Kim Young-hoon shortly after Samsung Electronics reached a performance bonus agreement with its labor union in May, aiming to discuss profit distribution among large corporations.
During the forum, labor and management expressed opposing views. Lee Gye-rae, chair of the Youth Committee of the Korean Confederation of Trade Unions, stated, "The development of the AI industry could reduce job opportunities for workers. Therefore, the excess profits of semiconductor companies should be used to support those adversely affected by the AI industry," adding that it should be utilized to improve the working conditions of all workers within the semiconductor supply chain.
In response, business representatives maintained that these profits are a result of innovation and investment. Lee Sang-ho, head of the Economic Division of the Korea Economic Association, countered, "Profits are a reward for innovation and a market signal that drives investment and production. Viewing them solely as a distribution target distorts the efficient allocation of resources."
He further noted, "Companies bear the risk of failure even when success is not guaranteed. If all profits are shared, the incentive for innovation diminishes."
The discussion also highlighted the need for a special purpose tax to enhance industrial competitiveness. This tax would be levied on excess profits once labor, management, and government agree on the criteria for such profits.
Professor Jeong Heung-jun from Seoul National University of Science and Technology argued, "A special purpose tax is a form of social solidarity wage that fits our country's reality. However, it should also recognize corporate efforts. Therefore, it must be designed as a special tax used for specific purposes rather than a general tax."
He added that if the special tax is utilized for research and development (R&D) investments, modernization of industrial complexes, youth employment, and improving the welfare of subcontracted and small business workers, it could enhance overall industrial competitiveness.
Conversely, Professor Yoon Dong-yeol from Konkuk University advocated for social solidarity investment based on corporate autonomy. He argued that corporate profits should first be used to build innovative capabilities for the future, which would then contribute to creating an environment for mutual growth, benefiting the entire ecosystem.
Professor Yoon stated, "Korea's advanced companies are engaged in a life-and-death competition with the U.S. and China. We must not undermine the long-term R&D and capital investment momentum of companies. In the AI era, we should focus on growing together rather than merely sharing results."
He concluded, "When the profits of large corporations are utilized for future competitiveness rather than redistribution, the benefits of growth can be spread to small businesses, the youth, and local communities."
Professor Yoon also pointed out the ambiguity surrounding the definition of excess profits, noting, "Industries like semiconductors and shipbuilding are highly volatile. Defining temporary booms as excess profits and distributing them can lead to social conflict."
* This article has been translated by AI.
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