Ruling party lawmaker seeks revision for greater labor voice in BOK rate decisions

Rep. Jeon Yong-gi of the ruling Democratic Party of Korea (DPK) attends a rally at the National Assembly in Yeouido, Seoul, 2024. Korea Times file

A ruling party lawmaker is seeking to revise a law regarding the Bank of Korea’s (BOK) rate-setting monetary policy board to include a member representing the interests of the labor sector.

Whether the renewed move would gain momentum remains unclear, since previous similar attempts all ended up in failure.

According to National Assembly records, Rep. Jeon Yong-gi of the ruling Democratic Party of Korea (DPK) and 11 other lawmakers proposed a bill July 24 to revise the law governing the central bank.

The bill seeks to reduce the number of BOK-controlled members from three to two, and instead install a labor representative.

The labor representative will be, the lawmaker added, selected by a candidate recommendation committee to be set up according to relevant ordinances.

Currently, three out of seven board members represent the central bank, including the governor, senior deputy governor and one member recommended by the governor.

The remaining four are recommended by the finance minister, the head of Financial Services Commission, the head of the Korea Chamber of Commerce and Industry and the head of the Korea Federation of Banks.

The board is a key decision-making body responsible for setting interest rates. However, its current makeup fails to adequately reflect the views of working-class people, especially low- and middle-income groups that are highly vulnerable to borrowing costs, the bill says.

“All members of the monetary policy board are appointed based on the recommendations from the government, industries and the banking sector," it says.

“The low-income earners are affected by interest rates the most. We need a figure that could represent the interest and voices of the labor sector on the rate-setting board.”

The DPK had pushed for similar moves twice before, but both failed to materialize.

In 2016, a DPK lawmaker proposed a bill whereby a finance minister-recommended member would be replaced with one representing the interests of the labor sector.

In 2018, another DPK lawmaker proposed a bill to install a representative recommended both by the labor sector and consumers. Both bills ended up discarded when the parliamentary terms expired.

The legislative move reflects criticism that the current board members encompassing economists and academic figures remain “out of touch” with the ordinary interest-paying workers.

March data on the monetary policy board members' wealth showed they had over 3 billion won ($2.2 million) each in assets.

Well-known hawkish board member Chang Yong-sung reported assets worth 10.3 billion won, up 2.4 billion won from the previous year.

About half of the gains — 4.2 billion won — came from his U.S. stock portfolio, which includes shares in top IT industry leaders such as Amazon, Tesla and Alphabet.