President Lee Jae-myung delivered a clear message at a Labor Day ceremony on Thursday: the country should move beyond what he called an outdated binary that treats pro-labor policies as anti-business, and pro-business policies as anti-labor. He said a society that respects workers and a country that is good for business can coexist, creating a virtuous cycle of growth and distribution, and of fairness and innovation. The direction is clear. The central question is what comes next: how to turn the declaration into workable institutions.
South Korea’s economy is facing pressure on two fronts at once. On one side, advanced industries such as semiconductors, artificial intelligence and biotechnology are demanding massive investment. On the other, labor-market gaps and job insecurity are deepening. In that environment, choosing only one side is no longer viable. As Lee noted, labor cannot exist without companies, and companies cannot exist without labor. The task, then, is not simply “coexistence,” but designing rules that make it possible.
Lee’s emphasis on “growth with labor” points to a core challenge. The era when the gains from growth were automatically shared is over. If productivity rises but workers do not feel the benefit, conflict is likely to persist. That is why the country needs a system in which corporate performance and worker compensation move together — with a structure that automatically shares part of increased profits, and also spreads burdens when conditions worsen. It must be built into the system, not left as rhetoric.
Lee also cited the principle of “fair pay for equal work,” which requires clearer definition. It does not mean standardizing wage systems across individual companies. Rather, it aims to set minimum standards across the labor market so work of equal value is treated fairly. Within companies, differences tied to performance and productivity are inevitable. Across society, however, a baseline is needed to curb excessive disparities. The two principles are not in conflict, but serve different purposes; without a clear distinction, policy will drift into confusion.
Lee’s call for shared growth, too, cannot remain a declaration. South Korea’s labor-management relations have long relied on dialogue and negotiation, but in sharply divided disputes, talks alone often fall short. Making cooperation real requires structural tools — such as profit-sharing arrangements, conflict-mediation bodies, and incentives that link long-term investment to employment. Institutions can build trust, and trust can make cooperation possible.
The relationship between labor compensation and investment also needs a reset. A simple claim that higher pay inevitably reduces a company’s capacity to invest does not fully explain reality. The issue is how compensation is structured. Wage systems centered on fixed costs can raise burdens, while performance-linked pay or stock options can reduce cash pressure while expanding workers’ share. The cooperation Lee described, the argument goes, should be realized through innovation in how capital is allocated.
The government’s role is also critical. If labor policy and industrial policy move separately, shared growth will be difficult. Pushing investment in advanced industries while labor regulations constrain it — or strengthening worker protections in ways that dampen investment appetite — creates internal policy collisions. The government needs a single framework: provide incentives that tie expanded investment to jobs and compensation, while establishing fair rules for competition in the labor market.
The meaning of this year’s Labor Day event was clear: labor and management leaders gathered in one place, signaling change. But symbolism is only a start. If the president’s message does not translate into policy, it risks ending as another statement.
Lee posed the right question. What remains is to build an answer. Coexistence between labor and business will not be achieved by slogans, but by institutions that work in practice.
* This article has been translated by AI.
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