SME Industry "Public Sector Labor Director System Raises Concerns of Inefficient Management and Moral Hazard"

The partial amendment bill (alternative) to the Act on the Operation of Public Institutions, which centers on the introduction of the 'Labor Director System in Public Institutions,' passed the National Assembly plenary session on the 11th. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Kim Bo-kyung] On the 11th, the small and medium-sized enterprises (SME) sector expressed regret over the passage of the public sector labor director system bill in the National Assembly plenary session, stating that it "raises concerns about promoting lax management and moral hazard in public institutions."

The Korea Federation of SMEs issued a statement on the same day, expressing regret that "the public sector labor director system bill passed the National Assembly plenary session without sufficient review of side effects or social consensus."

It added, "The SME sector has emphasized that the labor director system does not align with Korea's shareholder capitalism economic system and the reality of adversarial labor-management relations," and argued that "the premature introduction of the labor director system risks turning the board of directors into a battleground for labor-management conflicts, thereby promoting lax management and moral hazard in public institutions."

In particular, it warned against the expansion of the system to the private sector, stating that if the labor director system is introduced to private companies, it will clearly undermine the speed and expertise of management decision-making, thereby reducing corporate competitiveness.

Finally, it emphasized that "even in the operation of the public sector labor director system, institutional supplements such as restricting labor union activities during the labor director's term should be implemented when enacting subordinate laws to minimize side effects."

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