South Korea

日 조기 총선 공식화…다카이치 “책임 있는 적극 재정 국민에 묻겠다”

Maekyung | Local Language | News | Jan. 21, 2026 | UndeterminedPolitics and Elections

Prime Minister Sanae Takaichi of Japan formally announced the dissolution of the House of Representatives on January 23, with a general election scheduled for February 8. This election period of 16 days is one of the shortest in Japan’s postwar history. Takaichi emphasized the need to secure public confidence for a responsible and proactive fiscal policy following a coalition shift from Komeito to the Japan Innovation Party. She framed the dissolution as a decisive choice tied to her political future and a call for voters to judge her leadership.

The Liberal Democratic Party (LDP) currently holds 199 out of 465 seats in the House of Representatives, and with its coalition partner Japan Innovation Party’s 34 seats, the coalition barely holds a majority. The LDP aims to obtain a majority independently in this election. This dissolution shortly after Takaichi took office (just 454 days ago) is unprecedented, making it the shortest period for a prime minister to dissolve the House in recent times. The move also disrupts the usual legislative process needed to pass the 2026 government budget, given the limited time ahead.

Takaichi’s high approval ratings, consistently between 60-70%, influenced the timing of this dissolution as the government anticipates potential challenges in the regular Diet session, including criticism over inflation measures, Japan-China relations, and political funding issues. In the opposition camp, the Constitutional Democratic Party and Komeito merged to form a new centrist party, marking a significant political shift and the first major realignment in three decades. However, the new party faces skepticism from voters, with a recent survey showing only 28% have expectations for it and 68% who do not.

Komeito’s previous support base played a critical role in close electoral contests, raising questions about the new coalition’s electoral strength. Considering the election date, a new prime minister must be elected within 30 days following the vote, with an expedited schedule likely to accommodate the urgent passage of the government budget bill. Past transitions have taken about 10-15 days, but this timeline may be shortened in light of current fiscal priorities.

Korea Herald | English | News | Jan. 21, 2026 | Strikes and Work Stoppages

Korean banks are leading efforts to implement a shorter workweek as part of the country's push to ease its long working hours. KB Kookmin Bank has tentatively agreed with its labor union to introduce a 4.9-day workweek by moving Friday leaving times forward by one hour, to 5 p.m., pending final approval. Other major banks like NH NongHyup, Shinhan, and Hana are also preparing to implement similar measures, with some targeting rollout as early as January 2026. The reduced Friday hours will not affect wages, and office computers will automatically shut down at 5 p.m.

This initiative follows an October 2025 agreement between labor and management groups in the financial sector to reduce Friday working hours and establish a task force for a four-and-a-half-day workweek. Financial-sector unions have been advocating for shorter working hours and more family-friendly schedules, including proposals to reduce the standard workweek from 40 to 36 hours, amid Korea’s low birthrate and slow economic growth. The campaign gained momentum after President Lee Jae Myung pledged to bring Korea’s annual working hours down to the OECD average by 2030.

The government, led by the Labor Ministry, is preparing legislative and operational changes this year to improve working conditions and reduce working hours. The banking sector's early adoption serves as a trial that could influence the broader economy. Banks are seen as suitable for this shift since their work hours are fixed, unlike sectors like manufacturing. However, industry officials note that trimming an hour on Fridays may not equate to a full half-day reduction, which would require more extensive operational changes and policy discussions.

Yonhap | English | News | Jan. 21, 2026 | UndeterminedTaxes

The South Korean government will introduce a temporary tax incentive in 2026 for retail investors who sell overseas stocks and reinvest the proceeds in domestic assets. Investors who convert the proceeds into Korean won and invest domestically for at least one year will be eligible for an income deduction on capital gains from overseas stock sales, which are currently taxed at 20 percent. The tax exemption is capped at 50 million won (approximately US$33,900) per person, with the deductible amount varying by the timing of the sale: 100 percent for sales in the first quarter, 80 percent in the second quarter, and 50 percent in the second half of 2026.

Additionally, a special tax benefit will be offered to retail investors investing in currency-hedged products, allowing a deduction of 5 percent of the investment amount from overseas stock capital gains, up to a cap of 5 million won per person. These measures are part of a broader package aimed at curbing continued net capital outflows by domestic investors, which have contributed to the depreciation of the Korean won against the U.S. dollar.