[Editorial] Politics Must Not Waste the Time Bought by the Semiconductor Boom

Manufacturing operating margins stood at 24% in the second quarter of this year, but fell to 7.2% excluding Samsung Electronics and SK hynix. This is a warning that while the semiconductor industry is lifting overall performance, the competitiveness of other major industries is weakening. Taken together, the various assessments presented at an economic forum hosted on October 12 by the Korea Development Institute (KDI) and others can be summed up as follows: “It is a great relief that the semiconductor boom has bought the Korean economy some time. But there is not much time left.”

The warning that Korea could slip into negative growth from 2030 if it fails to reverse the trend of its long-term growth rate falling by 1 percentage point every five years is chilling. That is just four years away. Fiscal expansion or interest-rate cuts can prop up the economy in the near term. But they alone cannot strengthen the economy’s underlying fundamentals.

In fact, this is not the first time such warnings have been sounded. Even so, why are reforms always pushed to the back burner? The issue raised at the forum that day—the breakdown of checks and balances among politics, the bureaucracy and businesses—is a painful one. The criticism is that businesses are engaged in fierce competition in global markets while politicians are caught up in power struggles. Industrial restructuring brings hardship for workers and local economies, while labor reform inevitably creates clashes of interests. If politicians, who should mediate these conflicts and build consensus, fail to do their job, structural reform will amount to little more than a slogan.

Restructuring the steel and petrochemical industries, which are being squeezed by China’s aggressive push, is urgent. The government has a responsibility to support workers in changing jobs and receiving retraining, and to develop measures to ensure that the burden does not fall disproportionately on certain regions and workers. Regulations that block the entry of new technologies and businesses can no longer be left in place. More fundamentally, education, research and development, and compensation systems must all be reformed so that creative talent and ideas become sources of growth. None of these tasks can be completed in the short term.

We must not repeat the cycle of putting off reforms out of fear of shocks when the economy is weak, then forgetting their necessity during a boom. There is no way to know how long the semiconductor boom will last. But one thing is clear: every boom comes to an end, and changing the underlying structure of an industry takes longer than a boom lasts.

This content was produced with the assistance of AI translation services.