Labor-Recommended Director System at a Crossroads... All Eyes on 'SUEUN' Actions (Comprehensive)

Korea Eximbank to Launch Candidate Recommendation Committee Next Week
Korea Eximbank Labor Union Makes Another Attempt "Searching for Candidates"
If Korea Eximbank Fails Like Kieum, Momentum for Promotion May Be Lost

[Asia Economy Reporter Jin-ho Kim] Attention on the labor union-recommended director system, a campaign promise of the Moon Jae-in administration, is turning toward the Korea Eximbank, a policy bank. Since the attempt by IBK Industrial Bank, which was considered likely, has fallen through, if the system is also not introduced at Eximbank, the momentum for promotion within the current administration’s term will effectively disappear.

According to the financial sector on the 7th, Eximbank will activate the director candidate recommendation committee next week as the term of outside director Nam Myung-hyun ends on the 31st. The Eximbank board consists of a total of six members: three full-time directors and three outside directors.

The labor union-recommended director system does not require legalization, unlike the labor director system. It can be introduced with just labor-management consultation, and is regarded as a means for labor unions to intervene in corporate management rights. If Eximbank succeeds in introducing it, the outside director attending as a workers’ representative will have speaking and voting rights and participate in the institution’s decision-making.

The Eximbank labor union is currently searching for candidates to recommend to the committee. Last January, they recommended candidates in line with the expiration of two outside directors’ terms but failed to achieve their goal, so this year they are determined to appoint a labor union-recommended person as an outside director. Shin Hyun-ho, chairman of the Eximbank labor union, said, “We are contacting candidates from various fields to recommend to the committee. After the committee is formed next week, we will officially request the appointment of a labor union-recommended director to the company around mid to late this month.”

It is also reported that the Eximbank labor union is directly pressuring the Ministry of Economy and Finance, the higher authority with appointment rights. They are emphasizing the Ministry’s agreement last November at the Economic, Social and Labor Council to actively introduce the labor union-recommended director system with public institution labor unions.

Labor Union-Recommended Director System at a Crossroads, Eximbank’s Adoption Is Key

The active stance of the Eximbank labor union is largely due to the labor union-recommended director system being at a crossroads. Following the failure of introduction at commercial banks such as KB Kookmin Bank and IBK, there is a sense of crisis that Eximbank’s attempt may be the last chance.

In the case of IBK, until early April, the introduction of the labor union-recommended director system was considered a foregone conclusion. However, the candidate recommended by the labor union ultimately failed to pass the Financial Services Commission’s approval. Regarding this, the IBK labor union strongly protested, saying, “Financial Services Commission Chairman Eun Sung-soo and IBK President Yoon Jong-won, who promised the introduction, thoroughly deceived the IBK labor union.”

A financial sector official said, “As the Moon Jae-in administration is facing a lame-duck period, concerns are spreading that no further introduction of the labor union-recommended director system can be expected,” adding, “Whether Eximbank succeeds in introducing it will determine whether the issue sinks beneath the surface or resurfaces.”

However, the attempt to introduce the labor union-recommended director system at Eximbank is also expected to face significant difficulties. As seen in the previous IBK case, even if Eximbank President Moon Bang-kyu includes the labor union-recommended candidate in the candidate pool and nominates them, the candidate’s ranking could cause them to be filtered out at the final stage by the Ministry of Economy and Finance. In fact, last year, the candidate recommended by the Eximbank labor union was nominated at a lower priority and ultimately was not appointed.

The possibility of replacing Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, who holds appointment authority, is also a burden. The timetable, which usually takes about two months, is likely to be pushed aside if a new minister is appointed. Chairman Shin said, “If the Minister of Economy and Finance is replaced, the process of introducing the labor union-recommended director system will take a long time,” adding, “If the system is not realized this year, we will launch a strong struggle together with the financial labor unions.”