Despite strong opposition from business circles, the Strategy and Finance Committee of the National Assembly on Wednesday passed a bill that will guarantee employee representation on the board of directors of public institutions.
A day earlier, the Environment and Labor Committee approved a bill that will give paid time off to members of the unions of government employees and teachers for their full-time union activities.
The bills are scheduled to pass the plenary session of the Assembly on Jan. 11.
Both the ruling party and the opposition party have rushed the pro-labor bills, in a bid to win the hearts of union members ahead of the presidential elections.
When Lee Jae-myung, the presidential candidate of the ruling Democratic Party of Korea, met with leaders of the Federation of Korean Trade Unions in November last year, he promised to demand that his party legislate board-level employee representation.
In an apparent countermove, Yoon Suk-yeol, the presidential nominee of the major opposition People Power Party, expressed his support for the system, though his party is negative about it.
Labor groups welcome employee representation on the board of directors, while business groups have appealed for a sufficient examination of expected side effects and a social consensus before pushing the legislation.
Supporters for the system argue that it will enhance management transparency and fairness of public organizations. However, this argument is out of touch with reality.
Unions are already too powerful. People have often witnessed them physically block newly appointed chief executives from entering their offices on the first day of the job. In most cases, new chief executives eventually wind up accommodating union demands. If the system is enforced when the balance of power is already lopsided in labor’s favor, reform efforts to remove chronic ills of the public sector, such as lax management, will likely go up in smoke.
Chief executives of state enterprises would not dare push management plans opposed by unions if they become much more powerful. Employee job security and welfare benefits will be enhanced regardless of business performance.
It is generally acknowledged that public institutions free from market competition are inefficient. Nineteen of 38 major public institutions with 2 trillion won ($1.6 billion) in assets fail to even pay back interest on their loans with operating income. Labor representation on the board of directors will likely set back restructuring efforts to increase their organizational efficiency.
If such a system is enforced in the public sector, political and social pressure on the private sector to adopt it will be inevitable.
The Korean Confederation of Trade Unions recently vowed to spur its struggle ahead of the election. A former leader of the confederation even argued that inequality prevalent in Korean society could not be removed if “laborers do not rob the rich.” The confederation has held even unauthorized rallies to pressure the government and businesses, while the Moon government made a lukewarm response to their reckless and sometimes violent demonstrations. Now, the confederation has become bold enough to propose stealing from the rich. Businesses cannot but worry about this ever-intensifying struggle.
Business groups warn that board-level labor representation if applied to private businesses will weaken their global competitiveness by hampering swift responses to a management environment. Whether to adopt it must be left up to businesses.
Paid time off for unions of government employees and teachers is controversial, too.
Currently, members of the two public unions take unpaid time off from work to perform union duties full time. Under the new system, however, the government will have to keep paying full-time officials of the unions. It is unconvincing to pay their wages with tax. It is reasonable that wages for full-time union officials should be paid with union dues, as many business unions do.
Labor market rigidity due to labor-biased policies has been cited as one of the biggest stumbling blocks that drag down South Korea’s industrial competitiveness.
It is irresponsible to rush bills certain to produce serious adverse effects, no matter how urgent it is to capture voters’ hearts.
By Korea Herald (firstname.lastname@example.org