Business lobby urges passage of mega-zone bill, caution on retirement age hike

South Korea's top business lobby urged the National Assembly on Tuesday to swiftly pass a bill creating cross-regional special economic zones and to amend a recently revised labor union law, while calling for caution on proposals to raise the mandatory retirement age to 65 and to introduce a worker-presumption regime.

The Korea Enterprises Federation announced it had submitted a report titled "Business Community's Legislative Proposals for the Second Half of 2026" to the National Assembly.

The report covers 19 items in total — four bills requiring prompt introduction, 11 calling for swift passage, and four flagged for careful review.

The federation's top priority is the early enactment of a so-called mega-zone bill designed to boost corporate investment. The legislation would consolidate multiple local governments into a single broad economic region to nurture strategic industries including semiconductors, AI and future mobility. Its core provisions would offer companies investing in the zones deregulation along with tax and financial support.

The federation said the bill must include a special exemption relaxing working-hour regulations for research and development professionals. It argued that a "white-collar exemption" — excluding high-income specialists meeting certain criteria from working-hour rules — along with an expansion of flexible working-hour arrangements would help companies increase investment and hiring.

The group also proposed diversifying the unit for managing overtime from the current weekly basis to monthly, quarterly, semi-annual or annual cycles, and extending the maximum period for flexible and selective working-hour arrangements to one year. It further called for deregulation of the permitted duration for fixed-term workers and the scope of jobs eligible for dispatch work.

Legislative discussions are gaining momentum. The National Assembly voted Thursday to form a special committee to review the mega-zone bill. The panel, comprising 18 members including ruling and opposition party lawmakers, is expected to operate through Jan. 31 next year.

Disagreements over labor exemptions remain, however. Labor groups oppose the proposed exceptions to the 52-hour workweek, arguing they would encourage excessive working hours, and contend that extending the permitted duration for fixed-term workers could deepen job insecurity.

The federation also said supplementary legislation for the revised Trade Union Act — which took effect last March — is urgently needed. The amended law, commonly known as the "yellow envelope bill," broadens the scope of employer liability for subcontractors, expands the range of permissible labor disputes, and limits damages claims arising from strikes.

The federation expressed concern that the vague definition of "employer" under the revised law is causing confusion in bargaining between primary contractors and subcontractor unions. It recommended narrowing the definition to cover only those with decision-making authority over working conditions equivalent to that of the direct employer.

The federation also argued that performance-bonus distribution tied to operating profit, and workforce deployment or transfers resulting from factory construction or relocation, constitute inherent management decisions and should therefore be excluded from the scope of labor disputes.

The federation called for broader reforms to labor-management relations, including allowing the use of replacement workers during strikes, banning workplace occupations, removing criminal penalties for employers found guilty of unfair labor practices, and establishing a framework to regulate unfair conduct by unions.

On the Serious Accidents Punishment Act, the federation asked that the obligations and liability of management be more clearly defined and that penalties be adjusted to a more reasonable level. Specifically, it proposed replacing the minimum prison sentence with a maximum-sentence approach and lowering the ceiling on fines imposed on corporations from 1 billion won ($738,000) to 100 million won.

Industrial safety regulations have continued to tighten. Under an amendment to the Occupational Safety and Health Act promulgated Oct. 27, workplaces where three or more workers die within a year due to violations of safety and health obligations will be subject, from April next year, to a surcharge of up to 5 percent of average operating profit over the preceding three years.

The federation said proposals to raise the statutory retirement age to 65, introduce a worker-presumption system and expand class-action suits all warrant careful consideration.

A blanket extension of the retirement age, it warned, would prolong the tenure of high-wage workers, increasing labor costs and worsening promotion bottlenecks while reducing companies' capacity to hire young workers. As an alternative, the federation proposed a "post-retirement re-employment" model under which workers are rehired on new contracts after reaching retirement age.

The group also opposed the worker-presumption system, which is intended to protect the labor rights of special-employment workers and platform workers. Under the proposed regime, anyone providing labor services would be presumed to be an employee when their status is disputed, with the burden of proof falling on the business operator to demonstrate otherwise.

The federation argued that introducing such a system would raise labor costs and legal burdens for small businesses and self-employed operators, ultimately discouraging hiring.

Among the bills the federation asked the Assembly to introduce promptly are measures to streamline the process for revising workplace rules to reform wage structures, set a validity period for strike ballots, and enact legislation on industrial accident prevention support.

The federation called for allowing companies to revise workplace rules through consultation with workers — rather than requiring consent from a union or a majority of employees — when restructuring wages around job duties and performance, provided the average wage of all workers does not decrease.

The federation also sought expanded tax support for corporate investment, proposing a direct tax-credit refund system so that loss-making companies can still benefit from investment tax credits. It urged stronger tax support for domestic production facilities and tougher measures to prevent the overseas leakage of core technologies.

Lee Dong-geun, the federation's standing vice chairman, said he hoped the National Assembly would listen to what businesses on the ground truly need amid a rapidly changing business environment, adding that the federation would actively present its views to the relevant standing committees.

"Expanded tax support to promote investment, along with swift measures to eradicate the leakage of core technologies, are essential for companies to build their competitiveness," Lee said.