Labor Director System (Board-level Employee representative) is a system that allows directors representing workers to participate in the board's decision-making process at the board of directors of companies or public institutions. Labor directors may exercise their right to speak and vote on major matters, such as business plans, budgets, amendments to the articles of association, disposal of property, etc.
The purpose of introducing the Labor Director System is to protect workers as shareholders, to perform the role of effective monitors and advisors, and to promote investment in human capital. Despite labor reform, labor-management conflicts continue due to the dual structure and polarization of the labor market, continuous wage hikes and worsening management performance. The government is attempting to introduce the labor director system in public institutions by presenting the realization of social values of public institutions and establish it as national tasks.
The introduction of the labor director system to companies and public institutions can make significant changes in the Korean stock capital market, including its impact on the market economy in the future. It is expected that there will be positive aspects to improve corporate governance by preventing conflicts between labor and management and contributing to the productivity of companies and stabilizing labor-management relations. However, the effectiveness of workers who lack management expertise can be an obstacle to companies' rapid decision-making for economic activities, and whether labor directors can represent workers' interests and reflect them in company management is also a problem. Rather than equally applying the labor director system to companies and public institutions, it would be desirable to have sufficient experience after implementing it first to the public institutions, supplement the problem, and then try to introduce it to ordinary private companies.
As the conclusion, more consideration is needed to review the background of the introduction of the labor director system and the trends of foreign legislation before introducing labor director system. Also the new proposals on the labor director system of public institutions can be made to improve corporate governance for economic democratization.