Unions Joining Management? Financial Sector on High Alert as Financial Union Chairman Joins Ruling Party

Appointment of Regional Party Committee Member
Leading General Strike and Strong Stance
Monitoring Promotion of Labor Director System

Park Hong-bae, chairman of the KB Kookmin Bank labor union, is speaking at the eve of the general strike held at Jamsil Student Gymnasium in Songpa-gu, Seoul on the 7th. The Kookmin Bank general strike is the first in 19 years since the merger of Kookmin Bank and Housing Bank in 2000. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Kim Min-young] The financial sector is on high alert as the current chairman of the financial labor union, who has consistently demanded labor union participation in management, has been appointed as a Supreme Council member of the ruling party. There are concerns that the labor sector's influence within the financial industry may grow stronger, especially regarding the long-debated introduction of the labor director system and retirement age extension.

According to political and financial circles on the 3rd, Park Hong-bae, chairman of the financial labor union, was recently appointed as a nominated Supreme Council member of the new leadership of the Democratic Party of Korea.

This is the first time in eight years since former Democratic Party lawmaker Lee Yong-deuk in 2012 that a person who served as chairman of a major financial labor union, including chairmanship of city bank labor unions and the largest financial sector labor union, has become a Supreme Council member of a specific political party. At that time, Lee became a Supreme Council member while serving as chairman of the Federation of Korean Trade Unions, the higher organization of the financial labor union, so Park’s appointment differs in nature. This reflects the significant status of the financial labor union within the ruling party. Park, known for his hardline stance, led the first general strike in 19 years in January last year while serving as chairman of the KB Kookmin Bank labor union.

Financial Labor Union Chairman’s Political Moves Closely Watched by Financial Sector

The financial sector is closely monitoring Park’s political activities, wary that he might leverage political power to push through various labor issues. Currently, the financial labor union is negotiating with employers on issues such as the introduction of a lunch break shutdown system, the labor director system, performance-based pay, and extending the retirement age to 65, but progress remains stalled.

There are immediate expectations within the banking sector that the introduction of the labor director system might gain momentum. Park previously promoted a ‘union-recommended director system,’ a preliminary stage of the labor director system, during his tenure as chairman of the Kookmin Bank labor union. He also campaigned on the labor director system during last year’s financial labor union chairman election and won.

Not only Kookmin Bank but also state-run banks such as IBK Industrial Bank of Korea, Korea Eximbank, and public enterprises like Korea Asset Management Corporation (KAMCO) labor unions are pushing for the introduction of the union-recommended director system.

Political Support Strengthens

The political sphere has also joined in. On the 14th of last month, Democratic Party lawmaker Park Joo-min proposed an amendment to the Public Institution Management Act to introduce the labor director system in all public enterprises and quasi-governmental institutions nationwide. Under current law, public institutions are classified into three categories: public enterprises, quasi-governmental institutions, and other public institutions. Park’s amendment explicitly mandates the introduction of the labor director system in public enterprises and quasi-governmental institutions. Labor directors are to be directly elected by workers from among those who have worked for more than one year, with a three-year term and eligibility for reappointment. Labor directors will have the same authority as full-time directors as defined by law and articles of incorporation.

Regarding the financial labor union and political sphere’s efforts to accelerate the introduction of the labor director system, some voices point out the high possibility of infringing on shareholders’ rights and interests as stipulated by law. There is concern that management interference centered on labor unions could intensify, undermining autonomous management, which is why no institution has yet adopted this system.

A financial sector official said, “With a hardliner who led the first bank labor union strike in 19 years becoming a Supreme Council member of the ruling party, labor-management relations in the financial sector are expected to become more confrontational.”

There is also concern due to the risk of bank soundness deterioration amid signs of a resurgence of the novel coronavirus infection (COVID-19). Another official expressed unease, saying, “In a situation where survival is already precarious due to COVID-19, the aggressive push in the National Assembly to strengthen union activities is very worrisome.”

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