The Bank of Korea (BOK) has lowered its benchmark interest rate by 0.25 percentage points to 2.75% from 3% per year. Last month, it held rates steady amid currency market volatility, but with economic conditions deteriorating, policymakers had little choice but to implement a cut. The central bank now projects South Korea’s economic growth to slow to 1.5% this year, down from its previous forecast of 1.9%.
The economy is stagnating. Political turmoil has only deepened uncertainty, with President Yoon Suk-yeol’s declaration of martial law and the impeachment proceedings against multiple political leaders—including Yoon himself—casting a long shadow over the country’s stability. Meanwhile, external threats continue to mount, as U.S. President Donald Trump’s tariff war further rattles global markets. Domestic businesses are struggling in this increasingly precarious landscape, with the steel industry serving as a prime example. South Korean steelmakers are contending with an influx of cheap Chinese steel and a sluggish domestic construction sector. To make matters worse, the Trump administration has imposed a 25% tariff on steel imports, further squeezing the industry.
Yet, despite these economic headwinds, the labor union at Hyundai Steel’s Dangjin plant—affiliated with the Korean Confederation of Trade Unions—has staged four strikes this year. The union is demanding performance bonuses of 40 million won ($27,900) per worker, insisting that Hyundai Steel match the record-high incentives awarded to Hyundai Motor employees. The company initially proposed bonuses of around 26 million won ($18,000) per worker but was ultimately forced to implement a partial workplace shutdown as normal operations became unsustainable. Even as the industry faces an existential crisis, union leaders remain indifferent to the worsening economic reality.
Rather than addressing these urgent economic challenges, the main opposition Democratic Party remains fixated on advancing its pro-labor, anti-business agenda. In a parliamentary subcommittee, it pushed through an amendment to the Commercial Act that has drawn fierce opposition from business leaders. If enacted, the law would make it easier for minority shareholders to sue management over financial losses tied to executive decisions—an outcome that has raised alarm across corporate circles. Nevertheless, the Democratic Party is pressing forward, prioritizing electoral gains among retail investors over meaningful stakeholder discussions.
The party has also unilaterally passed a bill appointing a special prosecutor to investigate Myung Tae-kyun, a self-proclaimed power broker. Critics argue the move is nothing more than a politically motivated effort to discredit the People Power Party (PPP)’s presidential candidate ahead of an early election. Meanwhile, the party has reintroduced the so-called “Yellow Envelope Bill,” an amendment to the Trade Union and Labor Relations Adjustment Act designed to cap employers’ ability to seek damages from unions over legal labor disputes. Twice vetoed in the past, the bill would also shield unions from liability for illegal strikes—despite the rising number of militant walkouts, such as those at Hyundai Steel. Additionally, the Democratic Party continues to oppose lowering the highest inheritance tax rate, a measure that would facilitate business succession. With these legislative battles escalating, Acting President and Deputy Prime Minister Choi Sang-mok has no choice but to exercise his veto power against the Commercial Act amendment, the special prosecutor bill, and the Yellow Envelope Bill.
