ID :
188917
Thu, 06/16/2011 - 05:54
Auther :
Shortlink :
https://oananews.org//node/188917
The shortlink copeid
Think tank labels profit-sharing scheme 'anti-market'
A prominent economic think tank strongly criticized a government proposal for large companies to share some of their profits with smaller firms on Thursday, saying it is "anti-market and anti-capitalistic."
"Various measures proposed by the Commission for the Shared Growth for Large and Small Companies, such as sharing of excess profit, are not only anti-market, but they are also working as regulations against large businesses," a report by the Korea Economic Research Institute (KERI) said.
KERI is a research arm of South Korea's largest business lobby, the Federation of Korean Industries, which has the membership of over 600 of the country's largest businesses.
The KERI report is the latest of heated reactions from the country's business circles after the head of the government commission for shared growth, Chung Un-chan, proposed the introduction of the so-called excess profit-sharing program, under which large conglomerates will share profits that exceed their earlier goals with their suppliers.
Chung, a former prime minister, said the program will strictly be voluntary, but drew strong criticism even from many businesspeople and politicians, even including ruling party lawmakers.
In an earlier report dealing more specifically with the profit-sharing scheme, KERI said the term "excessive profit" does not even qualify as an economic term as what is excessive cannot be determined objectively.
"The profit-sharing program could undermine the very foundation of capitalism in that it will violate the legitimate claims (of businesses) to their profits that are generated by their paying for all necessary costs of production," the think tank said in its latest report released Thursday.
The report said instead of blindly protecting inefficient or incompetent businesses, the government should work to help improve the competitiveness of small and medium-sized businesses (SMEs), even as to let some perish if they cannot stand on their own in the market.
"Since the outbreak of the (2008) financial crisis, large businesses improved their productivity and profitability through large-scale restructuring and research and development investments," it said. "But the productivity and profitability of SMEs worsened under increased government support and a delay of restructuring."
"Various measures proposed by the Commission for the Shared Growth for Large and Small Companies, such as sharing of excess profit, are not only anti-market, but they are also working as regulations against large businesses," a report by the Korea Economic Research Institute (KERI) said.
KERI is a research arm of South Korea's largest business lobby, the Federation of Korean Industries, which has the membership of over 600 of the country's largest businesses.
The KERI report is the latest of heated reactions from the country's business circles after the head of the government commission for shared growth, Chung Un-chan, proposed the introduction of the so-called excess profit-sharing program, under which large conglomerates will share profits that exceed their earlier goals with their suppliers.
Chung, a former prime minister, said the program will strictly be voluntary, but drew strong criticism even from many businesspeople and politicians, even including ruling party lawmakers.
In an earlier report dealing more specifically with the profit-sharing scheme, KERI said the term "excessive profit" does not even qualify as an economic term as what is excessive cannot be determined objectively.
"The profit-sharing program could undermine the very foundation of capitalism in that it will violate the legitimate claims (of businesses) to their profits that are generated by their paying for all necessary costs of production," the think tank said in its latest report released Thursday.
The report said instead of blindly protecting inefficient or incompetent businesses, the government should work to help improve the competitiveness of small and medium-sized businesses (SMEs), even as to let some perish if they cannot stand on their own in the market.
"Since the outbreak of the (2008) financial crisis, large businesses improved their productivity and profitability through large-scale restructuring and research and development investments," it said. "But the productivity and profitability of SMEs worsened under increased government support and a delay of restructuring."
