'Labor Director System' Crossing the National Assembly Threshold... Will Banks No. 2 and No. 3 Follow K-Sure?

Ruling and Opposition Parties to Pass Amendment at Full Meeting of the Industry Committee on the Afternoon of the 5th
Mandatory Introduction of Labor Director System Expected for 5 Financial Public Institutions Including Shinbo

On the 14th, members of the Korean Federation of Trade Unions held a rally near the Industrial Bank of Korea in Yeouido, Seoul, urging the acceptance of seven demands, including the full application of the Labor Standards Act and the immediate implementation of the labor director system. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Kim Jin-ho] As the public sector 'labor director system,' supported by presidential candidates from both ruling and opposition parties, clears the first legislative hurdle in the National Assembly, tension is rising in the financial sector. Discussions on introducing the labor union recommended director system, a preliminary stage to the labor director system, are already underway mainly in policy banks, and if the bill is finally passed, the introduction of the labor director system will be mandatory in public financial institutions. Private financial companies are also expected to face considerable pressure.

According to political and financial sources on the 5th, the National Assembly's Planning and Finance Committee is scheduled to hold a plenary session in the afternoon to process the amendment to the Act on the Management of Public Institutions, which was approved the previous day.

The ruling and opposition parties held a coordination committee meeting the day before and approved the amendment focusing on the introduction of the labor director system in the public sector. The government proposal, which designates one non-standing labor director and requires going through the executive recommendation committee, will be adopted, with the implementation period set to six months from the date of promulgation.

The rapid progress of the amendment for introducing the labor director system is largely influenced by the support declarations from the presidential candidates of both parties. Lee Jae-myung, the Democratic Party candidate, promised the introduction of the labor director system to the Korean Confederation of Trade Unions in November last year. Recently, Yoon Seok-youl, the People Power Party candidate, also expressed support for introducing the labor director system in the public sector.

If the labor director system amendment finally passes the National Assembly, five financial institutions will be subject: Korea Credit Guarantee Fund, Korea Deposit Insurance Corporation, Korea Asset Management Corporation, Korea Housing Finance Corporation, and the Korea Inclusive Finance Agency. Additionally, demands for introducing the labor union recommended director system, which is actively discussed and introduced mainly in policy banks, are expected to intensify. The Export-Import Bank of Korea succeeded in introducing the labor union recommended director system for the first time in the financial sector last year. IBK Industrial Bank of Korea is also expected to introduce the labor union recommended director system soon.

If labor directors or labor union recommended directors emerge mainly in financial public institutions or policy banks, the influence is expected to expand to private financial companies. In particular, KB Financial Group, which has attempted to introduce the labor union recommended director system since 2017, is strongly mentioned. Woori Financial Group, whose employee stock ownership association is the largest shareholder, is also considered a candidate.

Meanwhile, evaluations of the labor director system and the labor union recommended director system in the financial sector are mixed. While they are positively evaluated for their potential to check the unilateral management of executives, concerns have been raised that they could disrupt management activities through so-called reckless opposition and obstruction. A financial sector official said, "We expect related discussions to proceed rapidly after the bill finally passes the National Assembly," adding, "Above all, sufficient review and discussion are needed in a direction that benefits the management activities of financial companies."

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