The Federation of Korean Industries (FKI) is calling for the enactment of the "Framework Act on Service Industry Development." The business lobby argues that a comprehensive support system is needed to establish the service sector alongside manufacturing as a core industry creating employment and added value.
According to FKI's analysis of Bank of Korea and National Data Center statistics released on the 16th, the service industry accounted for 71.1% of employment and 61.9% of gross value added as of 2024. Korea's service sector employs approximately 14.44 million workers, 4.8 times the manufacturing sector's 3.04 million. "The service industry is sustaining the employment foundation of the economy," FKI noted.
However, Korea's per-capita labor productivity in services stands at only 68.9% of the OECD average, ranking 27th among 37 member countries. This contrasts sharply with manufacturing, which ranks 6th at 122.0% of the OECD average.
In response, FKI submitted a position paper on the service law to the National Assembly and government, urging swift enactment. The legislation has been under discussion for 14 years, with four bills currently pending in the 22nd National Assembly. The bills include provisions for establishing a public-private joint committee, formulating basic plans every five years, and designating specialized research and statistics centers.
FKI requested expedited legislation for the service sector, which lacks the legal support infrastructure available to manufacturing. Manufacturing currently benefits from comprehensive support laws including the National High-Tech Strategic Industries Act and the Materials, Parts and Equipment Special Act, enabling packaged policy support. In contrast, the service industry relies on separate laws such as the Tourism Promotion Act, Content Industry Promotion Act, and Software Promotion Act, resulting in fragmented support. Over the past three years (2022-2024), the average corporate tax deduction rate was 24.7% for manufacturing versus just 8.3% for services.
FKI argued that support has become more urgent as Korea's service industry competitiveness reaches world-class levels. According to the World Trade Organization, Korea's service exports reached $138 billion in 2024, ranking 18th globally, driven by growing competitiveness in digital and content sectors.
FKI also highlighted cases where service legislation has fostered new industries, citing Singapore's Grab and Japan's Airbnb. Since 2020, Singapore has established an industrial regulatory framework covering both taxis and private ride-hailing vehicles, bringing new businesses into the institutional fold under unified market regulations.
"Once the service law is enacted, mechanisms such as conflict mediation bodies can be established, enabling dispute resolution through official procedures rather than public opinion battles," an FKI official said. "This will create a virtuous cycle for service industry development by reducing business uncertainty and enhancing sustainability."
Kwon Hyuk-min, head of FKI's Growth Strategy Division, emphasized, "Strengthening service industry competitiveness is an essential prerequisite for advancing to the $40,000 per capita income era. We must promptly establish an institutional foundation encompassing the entire service sector by improving the existing industrial policy framework."