The Seoul Metropolitan Government has decided to reduce the subsidies it provides to the Federation of Korean Trade Unions (FKTU), one of the two major labor groups in South Korea, by nearly 40 percent.

According to the Seoul Metropolitan Council on Thursday, the city government has allocated 1.05 billion won ($826,514) in subsidies to the FKTU this year. This is a reduction of 643 million won, which accounts for 38 percent of the 1.69 billion won the city government provided last year. If the budget is approved by the council, the subsidy to the FKTU will experience the largest decline in 10 years.

The subsidies to the FKTU from the city government increased to 2.36 billion won from 2.16 billion won between 2015 and 2017 when former Seoul Mayor Park Won-soon was in office. In particular, in 2017, the city government set aside 2 billion won in subsidies for the Korean Confederation of Trade Unions (KCTU), the other labor group, as well, exceeding 4 billion won in union subsidies.

However, since Oh Se-hoon took over as Seoul Mayor after winning in a by-election in 2021, the subsidies have been reduced. For FKTU, the subsidy declined from 1.77 billion won in 2020 to 1.61 billion won in 2021 and last year, 1.69 billion won was provided as a subsidy.

During the budgeting process for this year, the city government initially allocated the same amount of 1.69 billion won for the union subsidy, but proposed a significant reduction in the subsidy when submitting its supplementary budget to the council.

The items of subsidies for the FKTU, which the city government proposed to reduce, included projects that have consistently raised questions about their intended use, such as scholarship support, workshops and cultural inspections. A Seoul City official explained that the central government’s policy direction is to transparently provide subsidies to established trade unions and that the city government is joining the direction.

Meanwhile, the Ministry of Employment and Labor, which is responsible for labor reforms, announced a plan to improve the transparency of labor union finances on the same day. The plan includes requiring labor unions to publicly disclose their financial statements through a system accessible to the public and withholding tax benefits for unions that fail to comply. The ministry said that it would announce the revisions of the enforcement decrees of the Trade Union Act and the Income Tax Act for 40 days from the day.

The revisions will be presented to a Cabinet meeting in August and implemented from January next year. Tax credits will be applied to union dues to be paid from next year, according to the ministry. While the labor circle is threatening a fight against the Yoon Suk Yeol government’s tough stance on labor unions, the government appears to be pushing ahead with labor reforms, emphasizing the labor-management rule of law.

By Park Je-wan, Lee Jin-han, and Yoon Yeon-hae

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]