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  • Seoul’s “Plan for Democratization of the Economy of Seoul”

  • Economy & Investment News SMG 6916

    A full year has gone by since Seoul announced to ‘Democratize the Economy of Seoul’ for the first time among the 25 autonomous districts in Seoul, with the goal to realize an economy of mutual growth and fair trade, as well as to protect fundamental labor rights. Seoul, based on the achievements of the past year which included assisting tenant merchants, franchise stores, and small business owners, will this year announce the “2017 Plan for Democratization of the Economy of Seoul” and promote policies to benefit non-regular workers, employees at small businesses, and part-time workers.

    Recap of last year: Assisted the disadvantaged economic group by operating specialized support organizations such as commercial building lease counseling centers

    We have been providing support to the disadvantaged economic group by setting up ‘Commercial Building Lease Counseling Centers’ in which licensed real estate agents and lawyers help protect the rights of merchant tenants, ‘Unfair Loss Counseling Centers’ to resolve issues that arise between franchise stores and the head office, and a ‘Business Owner Support Center’ to help small business owners gain independence.

    Seoul was the first region in the nation that installed the ‘Long Term Safety Commercial Buildings’ project in order to overcome ‘gentrification’ of the old downtown, which resulted in the expulsion of residents. The project is yielding excellent results as 35 commercial buildings were designated as ‘long term safety commercial buildings’ and a total of 128 ‘mutual growth agreements’ were signed between landlords and tenants (landlords shall restrain from raising rents for at least five years and the landlords shall support up to 30 million won for remodeling costs).

    Unfair transactions in franchise stores is being improved through consistent efforts. The SMG has achieved policy change in the central government through a survey on 1,328 franchise stores of 49 franchise companies in four fields including pizza franchises, identifying unfair transactions in 11 companies, and taking action such as self-correction by companies, revising standard affiliate contracts, consigning authority to local governments, and conducting joint inspections of franchise stores.

    Efforts to improve working conditions are also in progress. The ‘Employee Representation on Board’ system, which was introduced in Korea for the first time, will be expanded to include 13 more investment and funding organizations and a total of 8,687 non-regular employees at companies in Seoul and investment and funding organizations became full-time workers by the end of 2016. The ‘Living Wage’ system, which was granted to 1,039 directly employed workers at companies in Seoul and investment and funding organizations for the first time in 2015, was expanded in 2016 to include 1,480 more privately-commissioned workers. In 2017, a total of 10,000 investment and funding organizations and new deal job participants will receive the extra benefits.

    What will happen next year?: Plans to provide support to artists, consignment agencies and start-up companies

    SMG defines Democratization of the Economy as creating ‘a society in which everyone is well-off, an economic city that centers on people to realize fair values’ and aims to enhance the economic sovereignty of the subjugated by announcing the ‘2017 Plan for Democratization of the Economy of Seoul’ which entails 23 tasks to commence on February 13th based on the achievements of the first year of its implementation. During the first year of its implementation, projects focused on small- and medium-sized businesses and small business owners. In the second year, the SMG will launch 7 New Projects and focus on those who suffer from exploitation of power including non-regular workers, employees who work at small businesses, and part-time workers.

    The Arts and Culture Unfair Trade Counseling Center will open on February 27th at the Seoul Art Space, Seogyo, in the Hongdae area, the mecca of artists. Eight lawyers will offer legal consultations, arbitration, and help people fill out legal forms while providing training on unfair trade cases once a week to up and coming artists who are potential victims.

    A ‘Special Financial Product’ in the amount of 5 billion won will be launched in March in order to raise the social insurance subscription rate at workplaces including the employment insurance of small business owners and non-regular workers. The product was launched to ensure a social safety network for employees. Each company will be able to receive up to 50 million won (interest subsidy rate 2.5%) for as long as five years (payable in installments with a one year grace period).

    To avoid a tragic delay in payment as demonstrated in the E-Land Part-timer’s Case and protect the labor rights of young part-time workers, the SMG has been operating 17 on-line (http://albaright.com) and off-line (120 Dasan Call Center) ‘Part-timer Payment Delay Report Centers’ since January. The center handles cases of overdue wages, petitions and lawsuits free of charge. The SMG will decide on whether the centers will continue to operate depending on the outcome of the ‘overdue wages report program,’ which started operation in January 16th and will continue until March 31st.

    The SMG will implement the ‘Benefit-sharing System,’ an economic model of mutual growth for companies and their consignment agencies to share benefits according to pre-arranged contracts, to public enterprises in Seoul. In 2016, the Seoul Metropolitan Rapid Transit Corporation was the first company in the local government to adopt the program. In 2017, we will expand the target to include Seoul Metro and the Seoul Housing & Communities Corporation. For example, the Seoul Metropolitan Rapid Transit Corporation, will share benefits by securing the amount of purchase through signing a private contract with a cooperation company that has succeeded in the domestic production and standardization of locomotive parts.

    Simultaneously, to prevent technology leaks and thefts at start-ups and small- and medium-sized businesses, which has been increasing as of late, we will put together a ‘Technology Protection Group’ composed of lawyers and patent attorneys. They will work in the ‘Seoul Start-up Hub’ at Mapo-gu, which will open in May, providing consultations so that companies can receive free appraisal as to whether their technology has been stolen by large corporations.

    The ‘Employee Representation on Board’ system, in which one or two employee representatives participate in board meetings and exercise their votes, was first implemented by The Seoul Institute in January who appointed an employee representative and is scheduled to be introduced to all 13 companies that are required to do so (investment and funding companies in Seoul with 100 or more employees) this year.

    Lastly, the ‘Prevailing Wage’ program chosen by the Obama administration will be applied to construction workers. Starting in July, all construction projects commissioned by the SMG will follow the ‘Prevailing Wage’ program.