Reasons for Proposal
Reasons for Proposal and Major Provisions
The recent series of increases to the prices of iron ore, crude oil, pulp, and other raw materials has reduced operating profits and otherwise caused serious financial difficulties for small to medium enterprises that supply larger businesses.
However, the reality is that due to the nature of the relationship between large enterprises and small to medium enterprises, the burden of higher raw materials prices mostly falls on the small to medium enterprises, which are unable to adjust the prices of delivered goods to reflect the increases in raw materials prices.
Moreover, the minimum wage is determined each year in accordance with the “Minimum Wage Act” and small to medium-sized enterprises have no choice but to increase employees’ wages accordingly, creating another burden for them to bear.
Accordingly, the Amendment allows the prices of delivered goods to be adjusted according to actual variations in raw materials prices and also reflect wage changes caused by minimum wage variations, thereby aiming to restore financial normality in small and medium enterprises and establish a mood of mutual support between large enterprises and small to medium enterprises (Article 21 (3) and (4) newly inserted).