The Korea Herald


[Editorial] Opaque accounting

Labor groups get 150b won in subsidies; unions refuse to disclose accounting data

By Korea Herald

Published : Feb. 22, 2023 - 05:31

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The nation’s two largest labor groups, the Federation of Korean Trade Unions and the Korean Confederation of Trade Unions, are found to have received 152 billion won ($117 million) in subsidies over the past five years from the Ministry of Employment and Labor and 17 regional governments -- eight cities including Seoul and nine provinces.

According to data disclosed by Kweon Seon-dong, a People Power Party lawmaker, the groups received 17.7 billion won in subsidies from the ministry and 134.3 billion won from the regional governments over five years, from 2018 to 2022.

All of the money they received comes from taxes paid by the people. It is estimated that the union fees each group collects a year are 100 billion won. It is hard to understand why they even receive such government subsidies in the first place.

What's more, their subsidy spending was seldom properly controlled. The groups got subsidies, for example, under the pretext of running an institution with words such as labor or worker in its name, such as a labor rights center, a support center for non-regular workers, a labor welfare center and a labor counseling center.

The groups opened some of their regional offices in commercial buildings but rents were found to have been subsidized by the regional governments.

Overseas traveling expenses for executives of the Federation of Korean Trade Unions and members of its affiliated unions were also subsidized with taxpayer money. The expenses over the five-year span topped 2.4 billion won.

Incheon subsidized 532 million won for the “overseas study for exemplar workers” and “international exchange with labor groups.” Seoul awarded 373 million won to the federation for three years from 2018 in subsidy for a program for international exchange and the observation of the international labor conference.

Gyeonggi Province provided 100 million won in English camp expenses for children of union members affiliated with the federation in 2018. The government also subsidized the union groups’ internal events such as athletic meets and training conferences.

Local governments award subsidies to unions under the Act on Support for the Improvement in Labor-Management Relations. The purpose of the act is to improve “cooperative and mutually beneficial” labor-management relations.

But it is likely that few unions in the world are as destructive and militant as the Korean labor groups and their large member unions. Particularly the Korean Confederation of Trade Unions caused social losses through its anti-US, anti-government political struggles that have nothing to do with labor activities.

Unions have legal obligations corresponding to subsidies. Under the subsidy management act, they ought to keep accounting data for five years, register financial, credit and tax payment information with the government computer network and report the progress of their subsidized programs to the government. However, unions' use of subsidies was seldom checked. The government is currently auditing subsidized programs of civic groups including the union groups.

Separately from the audit, the Labor Ministry recently demanded accounting data from 327 large unions with more than 1,000 members to see if they keep ledgers in compliance with the Labor Union Act, but 207 (62 percent) of them refused to file data. Both union groups even issued their affiliated member unions a guidance to refuse to submit accounting data to the ministry.

The government's demand is based on the Labor Union Act and reflects high popular interest in the accounting transparency of labor unions. The act requires unions to keep ledgers, declare settled accounts and report them to the authorities. However, unions have neither published their settled accounts nor have they been audited by outside accountants.

Unions collect fees from a large number of members and receive government subsidies each year. If so, keeping accounting transparency is obviously an obligation not only to their members but also to taxpayers. It is hard to understand why tax money is given to unions even though they refuse to fulfill the legal obligation of declaring accounting data.

It is unjustifiable to subsidize unions that flout legal liability and the rule of law. It is questionable if unions, particularly large ones, should receive government subsidies at all, even though they could operate on their membership fees alone. Accounting transparency must be the starting point of labor reform.