Trade unions join accounting disclosure system, two major unions remain opposed

[Photo by Yonhap]

An increasing number of South Korean trade unions, including those affiliated with the Federation of Korean Trade Unions (FKTU) and the Korean Confederation of Trade Unions (KCTU), are joining the adoption of the accounting disclosure system introduced by the Korean government as part of its efforts to implement the rule of law in labor management relations. On Thursday, five days after the accounting disclosure system for labor unions was introduced, seven out of 637 eligible trade unions across the country registered with the system, with concerns rising within the nation’s two major labor unions over potentially massive affiliate withdrawals to benefit from the tax credit.

According to the Ministry of Employment and Labor, the trade union of the Gimpo Urban Management Corp., affiliated with the FKTU, and the Asiana Pilot Union, affiliated with the Korean Public Service and Transport Workers’ Union under the KCTU, registered themselves with the labor union accounting disclosure system.

The Employment Ministry operates an accounting disclosure system under the revised Enforcement Decree of Trade Union and Labor Relations Adjustment Act (Trade Union Act), which came into effect on Sunday. As of Thursday evening, eight unions registered themselves with the disclosure system, including the Gimpo Urban Management Corp. Union, the Asiana Pilot Union, the Samsung Display Union, and the LG Electronics People-Centered Office Workers’ Union. The Samsung Display Union was the first to register for the accounting disclosure system on Wednesday.

“We were naturally in favor of the transparent accounting disclosure of unions promoted by the government,” Samsung Display Union leader Yoo Ha-ram said. “It was not difficult to register the union on the accounting disclosure portal. Our union has been providing summarized accounting information to non-members as well, so that they can see how our funds are spent and consider joining.”

The revised Enforcement Decree of the Trade Union Act requires trade unions with more than 1,000 members nationwide to register with the government’s accounting disclosure system to receive a 15 percent tax credit on union fees and 30 percent for amounts over 10 million won ($7,391). The registered unions can post their settlement of accounts on the system within the Labor Portal, a comprehensive information network for labor administration operated by the Employment Ministry.

“As the union fee tax credit system supports union activities with national taxes, the intention is to ensure trade unions’ openness and transparency, as well as that of their organizations that use union fees,” the ministry said.

The government started implementing the new system aimed at enhancing union accounting transparency in October, quicker than the original January 2024 implementation date. As a result, the eligible unions will have to upload their 2022 financial results by November 30 to be eligible for this year’s union fee tax credit for union fees from October to December.

But even if individual unions make the disclosure, they will not be able to receive the tax credit if their parent organization, such as the FKTU and KCTU, does not register with the disclosure system. The two major labor unions are the parent organization for 82 percent of the total number of unions required to register for the disclosure.

There are a total of 673 individual labor unions and federations with more than 1,000 members in Korea, of which 303 are affiliated with the FKTU and 249 with the KCTU, according to the Employment Ministry. “Many union officials and members have been calling for the FKTU and KCTU to join the accounting disclosure system as their affiliates cannot benefit from the tax credit without it,” Employment Minister Lee Jung-sik said on Thursday.

While the two major labor unions are still unwilling to join the government’s accounting disclosure system, they are weighing the option as their affiliates could leave for the tax credits.

“We will take legal action in response to the government’s measure, including a constitutional complaint,” the FKTU said. “Since members of each union will suffer the consequences from the end of the year, we will further consider and decide internally whether to join the accounting disclosure system.”

“Our position on the government’s measure remains the same, but we are discussing it internally as union members’ individual funds are on the line,” the KCTU said.