Unionized workers at major banks such as Industrial Bank of Korea (IBK) and Korea Development Bank (KDB) are advocating director recommendation by themselves and this has to do with the Moon Jae-in administration’s labor-friendly policy. Earlier, the government officially announced in July 2017 that it would implement the recommendation system in every public institution by 2022. The Financial Administration Innovation Committee also recommended the same system in financial companies.
In the private financial sector, unionized KB Financial Group workers demanded the same system at the group’s shareholder meeting in November 2017. At that time, the National Pension Service sided with the workers, but they failed to have a director appointed. The workers made two more attempts later but failed with foreign shareholders expressing concerns. Late last year, a person recommended by the Export-Import Bank of Korea union became an outside director candidate and the Ministry of Economy and Finance objected to his appointment.
Under the circumstances, IBK CEO Yoon Jong-won recently promised to implement the system after unionized workers’ pressure on him. This means the financial sector is about to have its first outside director recommended by a union. In the case of KDB, many outside directors’ terms are scheduled to expire in the near future, and thus workers’ demands for the recommendation system are likely to get even stronger.
The government, in the meantime, is rather cautious about the introduction of the system despite its five-year plan. Its current stance is because the system should be based on a mutual agreement between employees and employers. Also, according to the government, the system may lead to delayed decision-making and innovation in the financial sector, where business decisions need to be made very quickly, and unions’ intervention in management may result in frictions with executives and hinder the government’s public institution reform plan.
This trend in the financial sector is predicted to affect public enterprises in many other industries. For example, Korea Electric Power Corp. executives and workers signed a collective agreement in August 2018 to ensure more employee participation in management. In July 2018, the Korea Housing & Urban Guarantee Corporation became the first public enterprise in the country that prepared a long-term plan to implement director recommendation by workers. In late 2018, the National Pension Service adopted an agreement so that its executives and unionized workers can have talks for the implementation of the same system.