ID :
189993
Tue, 06/21/2011 - 07:24
Auther :
Shortlink :
https://oananews.org//node/189993
The shortlink copeid
'Profit sharing' could include sharing of losses: Chung
SEOUL (Yonhap) - The head of a government commission on Tuesday further stirred up a controversy over his earlier proposal for large companies to share some of their profits with smaller firms, saying the plan could also include sharing of losses.
Chung Un-chan, head of the Commission for Shared Growth for Large and Small Companies, also said the companies should eventually share not just their excess profits but any profit they make.
"(The commission) reviewed a 'cost settlement program' where large conglomerates and smaller companies will decide how much risk they will each shoulder and when a large company posts a loss, their suppliers, too, will share some of the loss," Chung said in a lecture to the Hansun National Strategy Forum, a private think tank.
The so-called profit sharing program was proposed earlier in the year by Chung, a former prime minister, who had then said it would only encourage large conglomerates to "voluntarily" share their excess profit with their smaller suppliers.
The proposal has since drawn heated debates and criticism from many, including ruling party lawmakers, while Samsung Electronics Co. chairman Lee Kun-hee flatly dismissed the idea as nonsense, saying the term "excess profit" cannot be an economic term as what is excessive cannot be determined objectively.
Chung said a better program would be one where companies share all their sales revenues and net profit but that he was forced to start with a plan where companies only share excess profit as the idea is new to the country.
"I believe it is more desirable to start with excess profit sharing, which is the lowest level of profit sharing, and move on to higher levels of profit sharing as South Korea is only beginning to develop a culture of shared growth," he told the Seoul forum.
The Federation of Korean Industries (FKI), the country's largest business lobby with membership of over 600 of the country's largest businesses, has repeatedly opposed the proposal saying the excess profit sharing program alone was anti-market.
"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," said the Korea Economic Research Institute, a think tank affiliated with the FKI, last week in a report.
Chung Un-chan, head of the Commission for Shared Growth for Large and Small Companies, also said the companies should eventually share not just their excess profits but any profit they make.
"(The commission) reviewed a 'cost settlement program' where large conglomerates and smaller companies will decide how much risk they will each shoulder and when a large company posts a loss, their suppliers, too, will share some of the loss," Chung said in a lecture to the Hansun National Strategy Forum, a private think tank.
The so-called profit sharing program was proposed earlier in the year by Chung, a former prime minister, who had then said it would only encourage large conglomerates to "voluntarily" share their excess profit with their smaller suppliers.
The proposal has since drawn heated debates and criticism from many, including ruling party lawmakers, while Samsung Electronics Co. chairman Lee Kun-hee flatly dismissed the idea as nonsense, saying the term "excess profit" cannot be an economic term as what is excessive cannot be determined objectively.
Chung said a better program would be one where companies share all their sales revenues and net profit but that he was forced to start with a plan where companies only share excess profit as the idea is new to the country.
"I believe it is more desirable to start with excess profit sharing, which is the lowest level of profit sharing, and move on to higher levels of profit sharing as South Korea is only beginning to develop a culture of shared growth," he told the Seoul forum.
The Federation of Korean Industries (FKI), the country's largest business lobby with membership of over 600 of the country's largest businesses, has repeatedly opposed the proposal saying the excess profit sharing program alone was anti-market.
"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," said the Korea Economic Research Institute, a think tank affiliated with the FKI, last week in a report.
