Financial Sector on Alert as Financial Union Chairman Takes On-Duty Role (Comprehensive)

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

At the 'KB Kookmin Bank General Strike Launch Ceremony' held on the 8th at Jamsil Student Gymnasium in Songpa-gu, Seoul, where the KB Kookmin Bank labor union and management failed to reach an agreement after night negotiations ahead of the general strike, Park Hong-bae, chairman of the KB Kookmin Bank labor union, is declaring the general strike. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Kim Min-young] The financial sector is closely watching 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. Concerns are rising that the labor sector's influence in finance may grow stronger 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 a city bank union and the largest financial sector union, has become a Supreme Council member of a specific party. At that time, Lee became a Supreme Council member while serving as chairman of the Korean Federation of Trade Unions, the upper 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 union.

Labor Union Participation in Management?

The financial sector is closely monitoring Park’s political moves, wary that he might use political power to push 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 in 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 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) unions are pushing for the introduction of the union-recommended director system.

Backing from the Political Sphere

The political sector 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 for 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 sector’s efforts to accelerate the introduction of the labor director system, some voices warn that it could significantly infringe on shareholders’ rights and interests as stipulated by law. There is concern that union-centered interference in management could intensify, potentially undermining autonomous management. Currently, no institution has adopted this system.

A financial sector official said, “With a hardliner who led the first bank union strike in 19 years becoming a Supreme Council member of the ruling party, labor-management relations in finance are expected to become more confrontational.” Another banking official expressed concern, saying, “There is worry that the financial labor union’s demands, having become political issues, might gain momentum.”

The risk of damage to banks’ soundness amid signs of a resurgence of the novel coronavirus infection (COVID-19) also adds to the burden. Another official lamented, “Given the precarious survival situation due to COVID-19, there is great anxiety that the National Assembly might aggressively push for strengthening union activities.”

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