The Korea Herald


[Editorial] Opaque accounting

Labor groups estimated to have huge budgets, but do not disclose fund use

By Korea Herald

Published : Dec. 22, 2022 - 05:30

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Budget execution by two labor groups -- the Korean Confederation of Trade Unions and the Federation of Korean Trade Unions -- and government subsidies to the two groups are on the chopping block as the government began to take issue with opaque accounting practices of labor unions.

The Office for Government Policy Coordination, under the Prime Minister's Secretariat, is said to have instructed the Ministry of Employment and Labor and other related ministries on Monday to grasp the scale of government aid given to the labor groups.

Prime Minister Han Duck-soo said in a government meeting on Sunday that "the sun must be shone on labor activities for the people to see" and that "the government will demand resolutely unions should disclose what the people need to know." In the meeting, there was reportedly talk that the people might be surprised if they look into financial management of unions.

The KCTU headquarters budget for last year amounted to 18.4 billion won ($14.3 million). Add to this the budgets of 16 industrial unions affiliated with the confederation and the confederation's annual budget is estimated to total more than 100 billion won.

The FKTU headquarters budget for last year was 14.4 billion won. Its total budget including budgets of its member unions has not been estimated, but considering its 1.15 million members compared with the KCTU's 1.13 million members in 2020 according to data of the Labor Ministry, the budget under the FKTU is expected to be on a similar level.

Most of their budget comes from union dues paid by members. Union dues vary depending on member unions, but suppose that every member of the KCTU pays 10,000 won a month. That would mean the confederation collects 11.3 billion won in union dues a month from 1.13 million members, which comes out to over 130 billion won a year.

However, exactly how much they collected, who used the money where and how, have never been exposed for several decades.

Furthermore, they receive subsidies from central and local governments. Last year, the Labor Ministry gave 2.9 billion won and 300 million won in funding to the FKTU and the KCTU, respectively, under the pretext of research, education and event expenses. Local governments subsidize the groups as well, but the government has not tallied up the subsidies.

Most "labor welfare centers" across the country were built with government money. The groups use the buildings as if they are their offices, but they do not pay rent. Rather, they are awarded contracts to maintain the buildings and receive maintenance funds from the government.

It is questionable if it is right to subsidize the KCTU that habitually shakes the rule of law and fights the government.

There are no agencies looking into government aid to the labor groups. Under the Labor Union Act, unions should report their "settled" accounts if authorities demand them, but the government seldom makes such demand out of respect for "labor autonomy." There are no provisions on audit standards and unionists' right to demand external audit and browse accounting books. As a result, union budgets were sometimes used inappropriately.

The prosecution arrested a former leader of the Korean Construction Industry Trade Union affiliated with the FKTU in June on charges of embezzling a total of 1 billion won in union dues. Incheon District Court sentenced a chapter leader of the Korean Public Service and Transport Workers' Union affiliated with the KCTU to two years and six months in prison in April on charges of squandering 370 million won in union dues on entertainment for 10 years from 2011.

These may be the tip of an iceberg. Money matters of labor unions have been treated as a sanctuary. Furthermore, they were protected to some extent by leftist regimes in exchange for their political support. The KCTU staged illegal protests, occupied worksites, made excessive demands and acted violently under the past regime. What made it possible for them to do so was enormous funds of union dues and government aid.

It makes no sense to keep the use of funds secret. Financial transparency of labor unions must be established. Government subsidies must be reconsidered.