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President Lee Jae-myung presides over a Cabinet meeting at the presidential office in Yongsan, Seoul, on September 2. / Source: Yonhap News

President Lee Jae-myung on Tuesday urged swift, comprehensive government measures to reverse South Korea’s declining potential growth rate, stressing the need for balance between business and labor in steering the economy forward.

“Unless we lift our potential growth rate, which has fallen to the 1% range, any policy will only deliver temporary effects,” Lee said while presiding over a Cabinet meeting at the presidential office in Yongsan. “Our government must be the first to reverse this downward trend.”

While recent data showed a rebound in industrial production, consumption, and investment in July—with retail sales posting their sharpest rise in 29 months thanks to consumer coupons—Lee said structural measures are necessary to bolster long-term growth.

He instructed ministries, including the Ministry of Economy and Finance, the Ministry of Science and ICT, and the Ministry of Trade, Industry and Energy, to coordinate on a national growth strategy. “We must act quickly to draw up and implement a whole-of-government plan that supports innovation in new technologies, regulatory reform, industrial restructuring, and workforce development, with proactive fiscal spending and productive financing as twin drivers,” he said.

During the meeting, the Cabinet approved the second amendment to the Commercial Act and the so-called Yellow Envelope Act (revising Articles 2 and 3 of the Labor Union and Labor Relations Adjustment Act). Lee said the goal of both laws is “to enhance corporate transparency and promote labor-management cooperation in support of the broader national economy.”

“Like a bird flying with two wings, both business and labor are essential,” Lee stressed. “To realize the intent of these laws, all market participants, including management and unions, must demonstrate mutual respect and a spirit of cooperation.” He warned against “killing the ox to straighten its horns”—an expression meaning a harmful overreaction.

The amended Commercial Act will take effect one year after promulgation, while the Yellow Envelope Act will be enforced six months after. The Cabinet also approved revisions to the Broadcasting Culture Promotion Foundation Act and the Korea Educational Broadcasting System Act.