Unions to exercise stronger influence over banks in 2022

The Federation of Korean Trade Unions (FKTU) holds a rally in front of the National Assembly in Seoul in this Dec. 14 file photo. Courtesy of FKTU

Presidential candidates support labor-friendly policies to attract voters

By Park Jae-hyuk

The possibility of private financial firms having union-backed directors has become greater, since the conservative main opposition People Power Party (PPP) agreed to the idea of giving board seats in public institutions to labor representatives, in an apparent attempt to win the hearts of working-class voters in the presidential election in March.

During Friday's meeting of the National Assembly's Strategy & Finance Committee, PPP lawmakers decided to support the revision of the Act on the Management of Public Institutions, which was proposed by the ruling Democratic Party of Korea (DPK) to enable workers at public institutions to exercise their rights to speak to boards of directors.

According to the standing committee, the revision will be passed this month.

The main opposition party changed its stance after its presidential candidate, Yoon Suk-yeol, officially promised to accept the labor-friendly policy, when he met representatives from the Federation of Korean Trade Unions, Dec. 15.

“I hope this system becomes a great help for public institutions to become rationalized and prevent insolvency,” he said at that time.

The passage of the revised bill will force the Korea Asset Management Corp., the Korea Deposit Insurance Corp., the Korea Housing Finance Corp., the Korea Credit Guarantee Fund and the Korea Inclusive Finance Agency to give board seats to representatives from their unions.

Although the Industrial Bank of Korea (IBK) and the Korea Development Bank (KDB) will not be subject to the new regulation, the two state-run banks are expected to face growing calls to adopt the system, given that the Export-Import Bank of Korea already appointed a union-backed, nonexecutive director in September.

The IBK union plans to ask the management to appoint a union-backed director in March, when the bank's two nonexecutive directors end their terms. The KDB union is also considering making a similar attempt this year.

If the state-run banks give their board seats to directors recommended by their unions, private-sector banks will be encouraged to demand the introduction of the labor-friendly system.

The KB Kookmin Bank union, which has asked for the appointment of a union-backed director since 2017, is considering making the request again this year, before the general meeting of shareholders in March.

Woori Bank is also considered to have the potential to ask for the appointment of a union-backed director, since Woori Financial Group's employee stock ownership association became the group's largest shareholder, after its privatization last year.

Amid the growing possibility of labor unions' intervention in local banks' management, employers have expressed concerns about potential setbacks in swift decision-making procedures.

Korea Enterprises Federation Chairman Sohn Kyung-shik picked worker representation on public institutions' boards of directors as one of fear factors for businesses this year.

“I hope the presidential candidates come up with policies intended to create a business environment where freedom of economic activity and entrepreneurship are respected,” he said in his New Year's address.