The South Korean government's announcement of unprecedented fines for industrial accidents has heightened concerns within the business sector. Discussions on regulatory relief, such as exemptions from the 52-hour workweek in mega-special zones, have taken a backseat as stricter regulations under the Serious Accident Punishment Act emerge, raising fears that these measures could undermine both corporate growth and national competitiveness.
On October 20, the government approved a bill to strengthen economic sanctions for fatal industrial accidents during a Cabinet meeting. The key provision allows for fines of up to 5% of a company's operating profit if three or more workers die due to violations of safety and health obligations.
Industry representatives have expressed concerns about the overlapping penalties. With existing criminal and administrative sanctions under the Serious Accident Punishment Act and the Industrial Safety and Health Act, the addition of large fines could impose excessive legal and financial burdens on companies.
For instance, if the new fine system were applied to Hanwha Aerospace, which reported five worker fatalities this year, the company could face a fine of approximately 150 billion won, based on 5% of last year's operating profit of 3.3 trillion won.
This regulatory burden is expected to have the most significant impact on manufacturing sectors that operate large production facilities and numerous subcontractors. In particular, the steel and construction industries, which are already facing prolonged downturns, could be pushed to the brink of collapse.
A construction industry official stated, "While preventing safety accidents is essential, simply increasing penalties each time an incident occurs is not a fundamental solution. This could threaten not only business activities but also the survival of companies."
Another industry representative noted, "We will do our best to prevent accidents in line with the government's safety enhancement policies, but each company has different scales and working conditions. It is necessary to establish detailed criteria that consider the size and characteristics of each business rather than applying uniform standards for sanctions."
Meanwhile, the lack of progress in discussions between labor and management regarding exemptions from the 52-hour workweek in mega-special zones adds to the burden on businesses. The management sector argues that flexible working hours are essential for responding to global competition and developing new technologies in advanced industries like semiconductors and batteries. However, labor representatives oppose this, citing concerns over long working hours and worker health rights, leading to a stalemate.
Industry voices are increasingly expressing that while penalties and managerial responsibilities for safety accidents are being strengthened, improvements in systems that support corporate investment and research and development remain stagnant, exacerbating management uncertainties.
Experts emphasize that merely increasing penalties will not effectively reduce industrial accidents, advocating for a shift toward preventive policies. Kim Dae-jong, a professor of business administration at Sejong University, stated, "If fines are imposed following the Serious Accident Punishment Act, the burden on companies will increase, potentially stifling investment and employment. While companies that neglect safety obligations should face strict accountability, the focus should be on prevention rather than post-incident penalties."
He added, "Supporting small businesses in investing in safety equipment and securing specialized personnel, as well as providing incentives for companies that diligently fulfill safety management obligations, is one way to balance punishment and prevention."
* This article has been translated by AI.
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