NPS’s Introduction of Worker Director System May Put Pressure on Private Companies

The National Pension Service (NPS), which manages about 700 trillion won worth of retirement funds of Korean people, has decided to introduce a worker director system. The NPS’s move is causing concerns as it has stakes in major domestic corporations.

The labor and management of the NPS signed an agreement on Dec. 19, 2018 to launch a working-level discussion on the introduction of the worker director system, the Ministry of Health and Welfare said on Jan. 9.

Both sides also agreed to reflect employees’ opinions in the formation of the Executive Candidate Recommendation Committee, which recommends candidates for NPS chairman, auditors, standing directors and non-standing directors. "The management agreed to take employees’ opinions into consideration in the formation of the Executive Candidate Recommendation Committee in accordance with the introduction of the worker director system," an NPS official said. Currently, employees and executives can recommend a person who represents the entire NPS workforce to the board of directors, but when the opinion collecting procedure is delayed, the board recommends a person on behalf of the NPS staff.

Those inside and outside the government expect that the NPS’s push for the worker director system will encourage other public institutions to accelerate the introduction of the system. In particular, some experts say that the NPS’s introduction of the worker director system will give the government a justification to recommend private enterprises to introduce it as well.

"The worker director system lowers the efficiency of organizations and increases the possibility that they attach too much weight to expanding employee welfare," said Jeong Jo-won, head of the Job Creation Team at the Korea Economic Research Institute.