[Column] Financial Sector Embarrassed by Sejin Union Influence

KB Kookmin Bank Reaches Labor-Management Agreement After Struggles... 'Strike' Averted
Labor-Recommended Director System and Employee Board Observation System Foster Labor Participation in Financial Sector Management

[Asia Economy Reporter Park Sun-mi]"We are prepared to carry out a full-scale strike."

Recently, the term 'full-scale strike' has frequently appeared in labor-management negotiations in the banking sector. During the special mediation meeting held by the Central Labor Relations Commission (CLRC) between KB Kookmin Bank's labor and management, which lasted 14 hours starting at 10 a.m. on the 19th, the union raised the prospect of a full-scale strike as a last resort. They maintained their stance that if negotiations on key issues, including performance bonuses amounting to more than 300% of the base salary, broke down, they would not hesitate to take collective action.

The union's strategy of threatening a full-scale strike even amid the COVID-19 pandemic proved effective. Concerned about customer harm and financial market disruption, the management eventually conceded. At the CLRC mediation meeting attended by President Heo In, Kookmin Bank agreed to pay an additional cash incentive of 1.5 million KRW on top of last year's level of performance bonuses. They also agreed to reactivate a Human Resources Task Force (TF) team to discuss recognizing the work experience of counter staff (L0) who were converted from non-regular to regular employees.

IBK Industrial Bank of Korea also experienced difficulties due to conflicts with the union, which had threatened a strike during earlier labor-management negotiations. The gap was so wide that several negotiation breakdowns led to dispute mediation by the CLRC. Although the negotiations were narrowly resolved, preventing a general strike, the possibility of introducing a union-recommended director system increased, adding to the union's involvement in management. The IBK union is currently pushing for amendments to the articles of incorporation to regularize the union-recommended director system, ahead of the expiration of two outside directors' terms in February and March this year, marking a first in the banking sector.

The strong influence of bank unions aligns with the growing social recognition of the need for workers' participation in management. Beyond the banking sector, the union's influence is strengthening across the financial industry, as seen in the Korea Housing Finance Corporation agreeing to introduce a worker board observer system this year following the Export-Import Bank of Korea. While active union participation in management brings positive effects such as transparent governance, if the intensified union influence disrupts balance, it could become an 'obstacle' to the growth of the financial industry. The threat of a union 'full-scale strike' is likely to grow stronger.

This year, banks face the challenge of growing amid fierce competition, including the expansion of big tech into financial services, while also participating in financial support for vulnerable groups such as self-employed individuals and small business owners in the post-COVID era. It is a critical time to overcome difficulties through labor-management cooperation rather than strikes. To prevent setbacks in the banking sector's growth due to the strong union influence, unions must skillfully maintain a balance with management.