Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
IBK, KDB feared to offer board seats to union
Industrial Bank of Korea (IBK) CEO Yoon Jong-won, front row center, poses with the IBK union leaders, after his inaugural ceremony at the state-run bank's headquarters in Seoul, Jan. 29. / Yonhap
By Park Jae-hyuk
State-run banks advised to be cautious about co-determination system
By Park Jae-hyuk
Critics are expressing growing concerns as State-run banks have expressed a willingness to adopt a “co-determination system,” where employees or their representatives are allotted seats on the board of directors.
Implementation of such a system is one of the pledges President Moon made during his election campaign, but it has never been carried out in the nation's financial industry.
On Jan. 27, the Industrial Bank of Korea (IBK), however, agreed with its labor union that it will push ahead with the shared governance structure.
The agreement was a prerequisite for the inauguration of newly appointed CEO Yoon Jong-won, who was blocked from entering the IBK's Seoul headquarters for 27 days following his appointment.
Although none of four non-executive directors at the state-run lender will face the end of their terms within 2020, the unionists are expected to push for the management to offer board seats to their representatives next year.
The IBK union's previous request for the implementation of a shared governance structure ended in failure in 2019.
Then Financial Services Commission (FSC) Chairman Choi Jong-ku expressed his skepticism about offering board seats to bank employees, saying, “Considering wages and welfare offered to bank workers, their working conditions are not poor enough to enforce worker representation on boards of directors.”
The FSC chairman has the right to appoint and dismiss the state-run bank's nonexecutive directors.
Incumbent FSC Chairman Eun Sung-soo, however, did not rule out the possibility of introducing a co-determination system at the state-run bank, saying last Wednesday that he will “deliberate over the system.”
Against this backdrop, the Korea Development Bank (KDB), which is also under supervision of the FSC, expressed a willingness to consider offering board seats to members of its labor union.
The KDB labor union's new leadership, launched last Thursday, promised its members that they will urge the management to adopt a co-determination system.
In response, the KDB said it will think about the system, if there exists demand from the workers.
According to the KDB, the terms of its five non-executive directors will end this year.
Experts advised state-run banks to be more cautious about introducing a co-determination system.
“Basically, the shareholder of state-run banks is the government, not their workers,” Yonsei University economics professor Sung Tae-yoon said. “State-run banks are supposed to offer public services, but worker representatives on board seats may go against shareholder rights in order to maximize the interests of workers.”
In December 2019, the Export-Import Bank of Korea discussed with its union about offering one board seat to an expert recommended by its members.
However, it eventually hired two experts recommended by management as new board members.