KTCU joins government accounting disclosure system

Yang Kyung-soo, chairman of the KCTU [Photo by Yonhap]

The Korean Confederation of Trade Unions (KCTU), a major labor group in South Korea, accepted the government’s demand for accounting disclosures on Tuesday, following in the footsteps of the Federation of Korean Trade Unions (FKTU), the country’s largest umbrella union.

“Despite the unfairness of the Yoon Suk Yeol administration’s revised Enforcement Decrees of Trade Union and Labor Relations Adjustment Act (Trade Union Act) and the Income Tax Act, we have decided to make accounting disclosures to avoid disadvantaging our union members,” the KCTU said in a statement posted on its website on that day.

The disadvantage for union members is tax deductions. With the enforcement of the government’s revised Enforcement Decrees of Trade Union Act and Income Tax Act, both unions (sub-organizations) and higher-level organizations must disclose their financial results from the October union dues onwards for union members to receive tax deduction benefits. The disclosure of union accounting is expected to give momentum to the Yoon administration’s policy of strengthening union transparency.

Until now, it has been considered a “taboo” in labor circles to open union accounting books. Although this must take place for the government to drive its policy of union transparency, it has been difficult to do so due to the backlash that the ‘unions’ autonomy must be guaranteed.

However, the fact that the KCTU followed the FKTU in accepting the government’s demand for union accounting disclosure suggests that they have limits in resisting the Yoon administration’s policy of strengthening union transparency outright.

There is also an observation that the two major labor unions’ acceptance of the government‘s policy was a foregone conclusion. “The government has consistently demanded accounting transparency from unions for a long time, and the two major unions have decided to accept it, considering the various disadvantages that would come their way if they do not,” a professor at the Law School of Hankuk University of Foreign Studies (HUFS) said. “It is a belated, but desirable choice.”

Initially, the two major labor unions strongly resisted the government’s demand for accounting data by instructing union members to “refuse it.” But they eventually decided to comply as they were concerned about the growing dissatisfaction of union members who could not receive tax deductions without disclosure, observers say.

The government welcomed the development, with Minister of Employment and Labor Lee Jung-sik saying, “Labor reforms to enhance transparency in labor relations based on the rule of law are showing result.”

“This transparent accounting disclosure by unions will serve as an opportunity to enhance transparency throughout society, based on the trust of union members and the public.”

However, it is expected that the government’s labor policy will not be implemented as smoothly as it would like, with the two major labor unions deciding to continue their hardline stance against the government. “The government’s intention is not to enhance the accounting transparency of unions, but to use it as an excuse to promote hatred of unions and engage in union repression,” the KCTU said in the statement posted on its website. “We will not allow any intervention or interference in union activities unrelated to tax deductions.”

The general election set for 2024 is also seen as a variable for labor reform. “It is not certain that (the two major unions’ acceptance of accounting disclosure) will lead to labor reform,” according to the HUFS Law School professor. “It may be difficult for the government to raise other labor-related issues before the general election.”