Hankyung Research Institute "Serious Concerns Over the Promotion of Introducing Labor Directors in Public Institutions"

"When Considering Korea's Adversarial Labor-Management Relations, the Board of Directors May Turn into a Battleground"

[Asia Economy Reporter Lee Hye-young] The Korea Economic Research Institute (KERI), under the Federation of Korean Industries, expressed opposition on the 8th to the ruling party's move to introduce the 'Public Institution Labor Director System.'

KERI stated, "We express serious concerns about the National Assembly's Planning and Finance Committee's push to pass the 'Amendment to the Act on the Operation of Public Institutions' for the introduction of the Public Institution Labor Director System," adding, "The Labor Director System, which represents the interests of a specific group such as workers, has faced much criticism even in Germany where it was first introduced. Considering the confrontational labor-management relations in our country, there is a possibility that the board of directors could be transformed into a battleground."

They continued, "If pressure to introduce this system extends to private companies after its implementation in public institutions, it could lead to many side effects, such as hindering active investment decisions and swift decision-making by the board."

KERI emphasized, "Given the economic crisis situations such as inflation concerns and the resurgence of COVID-19, rather than discussing the introduction of the Labor Director System, which has significant potential side effects, everyone should work together to overcome the economic crisis."

The Labor Director System is a system where worker representatives participate in the board of directors with speaking and voting rights, engaging in decision-making. It operates by having labor unions or employee stock ownership associations elect one worker to dispatch to the board.

While the ruling party is actively moving to legislate the Public Institution Labor Director System, the business community has been issuing consecutive statements opposing its introduction and urging the suspension of the legislative process.