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Workers Participation in Management


Workers Participation in Management: A new management paradigm of coexistence

Workers Participation in Management (WPM), as one of Seoul Metropolitan Government’s policies for labor-management cooperation, selects one or two worker representatives and appoints them as non-executive directors to participate in board meetings.

This system enables labor-management relations to reduce conflicts and take a step towards positive communication and coexistence, further laying the groundwork for management innovation and economic growth. WPM has already been introduced by 18 European countries and The European Parliament (E.P) and Davos Forum also acknowledge the positive effects of WPM.

In addition, according to the OECD Guidelines on Corporate Governance of State-Owned Enterprises (2015), “If employee representation on the board is mandated, mechanisms should be developed to guarantee that this representation is exercised effectively and contributes to the enhancement of the board skills, information and independence.” This shows the global increasing interest in WPM.

Global assessment on Workers Participation in Management

■ Background of promotion of WPM

Social conflict in Korea is the second-most serious among the 27 OECD member states. The conflict causes 246 trillion won in annual economic losses to the country. Specifically, conflicts between the social class and labor and management are major factors, which urgently need to be improved.

OECD Index of conflict (5 highly ranked states)

Seriousness of conflict by type

■ Effects of introduction of WPM

• Paradigm shift from confrontational labor relations to cooperation and coexistence
→ Minimize coflict cost

• Checks and balances for management by worker’s participation
→ Realize transparency management

• Worker’s participation in innovation of state-owend corporations
→ Increase of enforceability and management innovation of SOE

• Effective communication between lobor and management
→ Core value of economic growth engine

■ Domestic and overseas cases of introduction of WPM

There are already several domestic instances where a quasi-WPM has been introduced, a program in which public figures of labor circles are nominated as executive directors to foster management innovation. The 18 European member states of the OECD including Germany, Sweden, and France have already introduced and applied WPM to the private sector and are actively engaged in implementing the system.

Domestic cases of introduction of WPM

Institution Contents
Korea Worker’s Compensation & Welfare Service As recommended by United Organization of Labor Union, serves as General, Secretary of Federation of Korean Trade Unions
National Pension Service As recommended by United Organization of Labor Union, serves as non-executive member
National Health Insurance Corporation As recommended by Labor Union, serves as Vice President of Federation, Korean Trade Unions

Overseas cases of introduction of WPM