"Promise of a 'Radical Transformation' Lost Meaning"
"Concerns Over Policy Project Disruptions Due to Declining Morale"
Korea Land and Housing Corporation (LH), which promised a complete transformation after causing controversy over land speculation using insider information, has been criticized for not properly implementing its innovation measures. It was revealed that LH, which had pledged to reduce excessive employee welfare benefits, actually significantly increased welfare expenses last year.
According to data submitted by LH to Lee Yeon-hee, a member of the National Assembly's Land, Infrastructure and Transport Committee from the Democratic Party of Korea, LH spent 51.7 billion KRW on employee welfare benefits last year. This is an increase of 20.7 billion KRW (67%) compared to the previous year.
After the LH scandal in 2021, LH announced a joint first-phase innovation plan with the Ministry of Land, Infrastructure and Transport and related departments, pledging a "reformation at the level of dismantling." The innovation plan included mandatory asset registration for employees, organizational slimming through staff reduction, reduction of welfare expenses, and restrictions on contributions to the in-house labor welfare fund.
According to this innovation plan, LH was to allocate welfare expenses within 31.1 billion KRW, a 15% reduction compared to 2020 (36.6 billion KRW), over five years from 2021 to 2025. In 2021, 31.1 billion KRW and in 2022, 31.0 billion KRW were spent on welfare benefits, but last year the expenditure was significantly increased, breaking the reduction promise. The average welfare expense per employee last year was 5.76 million KRW, up 2.59 million KRW from 3.17 million KRW in 2021.
LH stated, "Due to receiving a D grade in management evaluation for three consecutive years, employee morale was undermined, raising concerns about disruptions in policy project execution, so welfare points were provided through labor-management agreement." LH gave all employees an additional 2.05 million welfare points on top of the usual 950,000 points. The shortfall was covered by drawing from the 2026 budget.
Ultimately, the Ministry of Land, Infrastructure and Transport requested LH in August to prepare a trust restoration plan, including measures to deduct and recover the 20.7 billion KRW overspent from future welfare expenses. Only recently did LH agree to reduce this year's welfare expenses to 19.8 billion KRW and to further deduct the excess amount next year.
The plan to sell non-core business assets to use the proceeds for housing supply also fell short, with last year's actual sales amounting to 3 billion KRW, only 1.2% of the asset sales target of 245 billion KRW.
Although LH's 2021 innovation plan included an "organizational slimming" strategy to gradually reduce the workforce by more than 20%, the total number of executives and employees decreased only 8.4%, from 9,683 at the end of 2020 to 8,872 by the end of June this year. Moreover, the number has started to increase again this year.
Meanwhile, nearly 50 LH executives and employees were investigated for land speculation allegations, but only four were sentenced to imprisonment.
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