President Lee Jae-myung said Wednesday that the issue of utilizing corporate excess profits "must be approached very cautiously," drawing a line against hasty institutionalization. He warned that if Korea alone moves first on debates over excess profit distribution, "a situation could arise where companies flee," stating that international coordination must be a prerequisite. While directly addressing the debate over "excess profit distribution" stemming from the spread of artificial intelligence (AI), he effectively raised the argument that it is premature.
At a press conference marking the first anniversary of his inauguration, held at the Yeongbingwan guest house of the former presidential compound that day, Lee referred to the recent labor-management conflict over distributing Samsung Electronics' operating profit. "In the past, when a company made large profits, people asked for wage increases, but they could not have imagined asking to share the operating profit itself," he said. "A situation has arrived that was unimaginable in the old days."
Yet he drew attention by adding, "That does not mean such demands are wrong." He acknowledged that the excess profit issue is an unavoidable challenge of the times going forward.
In the industrialization era, a virtuous cycle operated in which corporate profits led to wage increases, expanded employment, and increased consumption. However, in a future where AI and robots replace labor, concerns are growing that while corporate productivity and profitability rise, labor income could decline. The point is that a paradox could emerge in which companies produce more, while the income base of consumers who would buy those goods weakens.
While sharing this awareness of the problem, Lee diagnosed that there are limits to preemptive institutionalization at the national level. "This problem cannot be solved by debating only within Korea," he said. "It will become a common global agenda and could affect the international trade order."
He expressed strong concern in particular about Korea moving first on institutionalization. "If Korea alone begins this kind of debate first, a situation could arise where companies flee," Lee said. "If there is a perception that Korea has social pressure to set aside a portion when operating profit margins are high, foreign companies may also be reluctant to invest domestically." He continued, "The same goes for domestic companies," explaining that "it would effectively produce an effect similar to raising the corporate tax." He also said, "Excess profit distribution could have lower predictability than the corporate tax," and that it is "an issue that could have a very serious impact on national industrial policy."
By contrast, unlike corporate excess profits, he took an active stance on utilizing excess tax revenue. "We will focus on the direction of recovering the potential growth rate and pursuing long-term investment," Lee said. He first expressed a negative view of using excess tax revenue for fiscal spending like ordinary tax revenue. "Spending a lot when a lot comes in and spending little when little comes in is a foolish act that abandons the role of finance," he criticized.
"Reducing government bonds is not an absolute truth," he said. "If the current value of 1 trillion won is greater than 1 trillion won in the future, we should spend it now." He continued, "Raising the potential growth rate is a truly important task, but paying off debt does not raise the growth rate," repeatedly stressing the need to expand growth engines. "With the population declining and labor productivity issues, the potential growth rate is projected to fall below the mid-1% range," he said. "Now is the time to invest for the future."
He cited semiconductors and next-generation growth industries as investment areas. "It is about discovering, investing in, and creating semiconductors and new growth engines," Lee said. "The state can make large-scale investments in areas that are difficult for the private sector." He added, "Young people are in a difficult situation, but if we invest for the future, we can give hope to the next generation."
Lee also compared the use of excess tax revenue to farming. "Sowing seeds every year and harvesting that year is important, but even if we cannot harvest in our own time, we can cultivate a forest for our descendants to use 30, 50, or 100 years later, or plant highly productive fruit trees," he said.
In line with this vision, the government plans to push for the creation of an independent fund to separately manage and operate excess tax revenue. The intent is to establish a kind of fiscal buffer to stably secure funding for future investment. Earlier, Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol said, "We aim to use excess tax revenue as funding for a sovereign wealth fund and create a virtuous cycle that generates more money from it."
