Korean insurers are on alert as the Korean Confederation of Trade Unions (KCTU) is moving to establish a nationwide labor union for insurance sales agents. If the labor union is set up, insurance salespeople will have the collective bargaining right and can go on strike.
The national insurance salesperson labor union under the KCTU has decided to submit a labor union establishment notice to the Seoul Regional Employment and Labor Administration on Sept. 18. An official from the labor union said, “As the Moon Jae-in government has pledged to guarantee the fundamental labor rights for 2.50 million workers in special employment, 400,000 insurance sales agents are pushing for the launch of a labor union to gain the labor's three primary rights and respond to unfair acts of insurance companies.”
In October last year, the the Federation of Korean Trade Unions (FKTU), another nationwide umbrella labor organization, launched a similar project. Yet it focused on establishing a labor union mainly consisting of life and non-life insurance salespeople in Daegu, Honam and Chungcheong regions. The KCTU's project is more comprehensive. It targets salespeople of not only individual insurers but also general angencies (GAs).
Insurance salespeople are representative of workers in special employment. Under the current law, workers in special employment are not allowed to set up a labor union. This is why the insurance salespeople labor union under the KCTU chose a detour. It is possible to launch a labor union if a local government accepts its establishment report and gives a registration certificate, although such an adminstrative measure does not make the union a legitimate entity. But a union thus created is guaranteed the labor's three primary rights, including the right of collective organization, the right of collective bargaining and the right of collective action, and is allowed to conduct union activities on a nationwide scale. The FKTU applied for the foundation of the insurance salesperson labor union last year but a registration certificate has not been given to it yet. The government is now facing more pressure to allow a labor union for insurance sales agents as the KCTU has joined forces.
Insurance companies are worried as the emergence of a salespeople labor union will lead to demand for higher allowances, which will increase fixed costs and working expenses, ultimately forcing them to lay off insurance salespeople with poor performance. The proposed labor union is primarily intended to protect insurance sales workers with poor performance, but ironically, it can drive them over the edge.
Lee Ji-man, professor of management at Yonsei University School of Business, said, “General companies consider downsizing employees who are older and receive higher wages when costs increase. However, insurance salespeople get an income based on their performance. Those who have less income can suffer a heavier blow.”
He said 22.8 percent of the total insurance sales representatives receive less than 500,000 won (US$420) of monthly income. Considering the fact that the total number of insurance salespeople comes to 400,000, including 180,000 from general insurance companies and 220,000 from GAs, 90,000 of them can lose their job.
However, market experts said the planned labor union is unlikely to be formed for now. The key issue in setting up a labor union is whether its members are directed and controlled by their company. Since insurance sales agents sign a contract with a specific firm and get paid according to their sales performance, they cannot be seen as being directed and controlled by their company. It is against this backdrop that the FKTU has not yet received a registration certificate for the insurance salespeople labor union it has been promoting for about a year.