Labor Union to Enhance 'Financial Transparency'... Also Plans to Announce Audit Results (Comprehensive)

Minister of Employment Announces Measures to Strengthen Union Financial Transparency
Specifies Qualifications and Election of Audit Committee to Prevent Opaqueness
Considers Public Disclosure of Audit Results... Pursues Legal Amendments

The government has taken decisive action to strengthen the financial transparency of labor unions. By the end of January next year, it will order 253 unions to maintain and preserve accounting documents, and impose administrative sanctions if deficiencies are found. Additionally, to resolve controversies over 'opaque accounting,' the government is considering publicly disclosing the audit results of large unions and plans to pursue legal amendments to enhance the independence of union accounting audits.

On the 26th, Lee Jeong-sik, Minister of Employment and Labor, held a briefing at the Government Complex Sejong and announced measures to strengthen the financial transparency of unions. This move follows President Yoon Seok-yeol’s declaration on the 21st that union corruption is one of the three major corruptions in Korean society, emphasizing strict law enforcement. The government and ruling party are now actively pursuing countermeasures.

Minister Lee stated, "Since 1987, our unions have grown quantitatively and exert significant influence across politics, economy, and society. However, public distrust is increasing regarding whether union finances are managed transparently and disclosed, with the term 'opaque accounting' even being used." He added, "This is because unions have demanded transparency from companies but have been stingy in self-regulation."

Minister of Employment and Labor Lee Jeong-sik is briefing on the transparency of labor union finances on the morning of the 26th at the Government Sejong Complex in Sejong City.
[Image source=Yonhap News]

First, the government will improve the system to enable unions to self-assess their financial transparency under current laws. It will guide 253 unions and federations with more than 1,000 members and large financial scales to conduct voluntary checks on the maintenance and preservation of accounting-related documents by the end of January next year. If deficiencies are found, the government plans to demand corrections and impose fines.

According to the current Labor Union Act, unions must keep and preserve at their offices the membership lists, bylaws, names and addresses of executives, meeting minutes, and financial books and documents within 30 days of establishment and for three years thereafter. Furthermore, unions must report their settlement results and operational status when requested by administrative authorities. The government plans to impose fines of up to 5 million won if unions fail to maintain or preserve documents or submit false reports on settlement results.

Moreover, the government will pursue legal amendments to secure the independence and expertise of union auditors. Although audits by auditors are mandatory under current law, there are no qualification restrictions, making it difficult to guarantee professionalism and independence. Also, the specifics of publicizing settlement results and operational status are not clearly defined, creating blind spots. The government intends to specify auditor qualifications and election methods and clarify the methods and timing of financial disclosures to effectively guarantee union members' right to know.

In particular, the government is considering requiring unions above a certain size to publicly disclose audit results and plans to expand union members' rights to inspect these results through legal amendments. This is expected to significantly help resolve the long-standing issue of 'opaque accounting' in Korean unions and strengthen transparency.

The Federation of Korean Trade Unions (FKTU) and the Korean Confederation of Trade Unions (KCTU) are estimated to collect over 100 billion won annually from union dues, but the specific usage is not publicly disclosed, leading to criticisms of sloppy accounting practices. Consequently, misconduct cases such as the embezzlement of over 1 billion won by Jin Byeong-jun, chairman of the National Construction Industry Union, continue to occur.

Members of the Korean Public Service and Transport Workers' Union, affiliated with the Korean Confederation of Trade Unions, shout slogans at a joint strike and all-out struggle rally held near the Presidential Office in Yongsan-gu, Seoul, on the afternoon of the 1st.
[Image source=Yonhap News]

In addition, the Ministry of Employment and Labor will address unreasonable labor-management practices. Starting February next year, it will operate an online 'Labor-Management Misconduct Reporting Center' and respond strictly to suspected violations of labor laws such as coercion to join or leave specific unions and refusal to disclose financial operation results. It will also strengthen labor inspections to eradicate the 'five major illegalities and misconducts in the labor market': wage arrears, unfair hiring, workplace harassment, misuse or abuse of lump-sum wages, and unfair labor practices.

Minister Lee explained that administrative measures through the Labor Relations Commission will be pursued regarding the POSCO branch of the Metal Workers' Union, where allegations of obstructing withdrawal from the KCTU have been raised. Previously, the POSCO branch, one of the multiple unions at POSCO, attempted to withdraw from the KCTU but was thwarted by the expulsion of the Metal Workers' Union executive committee. Minister Lee said, "They said they want to change the organizational form by the consensus of union members, but there is doubt whether going that far protects the autonomous right to organize. We will seek a resolution from the Labor Relations Commission on this matter."

Given the strong opposition from the two major trade union federations to the government's efforts to enhance union financial transparency and labor reforms, further conflicts are expected. The KCTU rebutted President Yoon’s remarks on 'eradicating union corruption,' stating that "union dues, the fruits of members' blood and sweat, are managed transparently." The FKTU also expressed that these measures are "an infringement on union autonomy and an attempt to tame unions."

Minister Lee emphasized, "Recent deviations by some unions, such as embezzlement of union dues in the construction union and interference by union officials in hiring, have caused public distrust toward all unions." He added, "Unions need self-innovation in the field, in line with the changing times, together with the public." He concluded, "Let us work together to eliminate unreasonable practices in the labor market and enable companies and workers to grow together. The government will actively support this."

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