Bankruptcy process opposed for local agencies

February 16th, 2014 · Economy and Worklife, Legal news · 0 comments

Original article in Korean is at this link.

The Gyeonggi-do provincial government is opposed to the introduction of a bankruptcy process for local public entities (지방자치단체).

The province annouonced that, “a system of bankruptcy for local public entities would give the central government considerable power over local finances, violating fiscal autonomy and destroying the foundation for local entities, so it is unacceptable.”

The province argued that there should be first discussions over reforms to the current 8-to-2 ratio of national and local taxes. It suggested the 6-to-4 ratio found in advanced countries such as the United States and Japan.

The province also expressed the opinon that the introduction of a bankrupcty system is inappropriate considering the current situation in which the government is placing additional burdens on provinces to pay for social services, worsening the state of local finances.

This year Gyeonggi-do’s expected budget for social services is 5.5267 trillion won, 34.5% of its total budget of 15.9906 trillion won.

A member of the Gyeonggi-do Office of Planning and Coordination said that “the government has already begun instituting its pre-warning system for local entities’ finances, so it’s difficult to see any need for this additional bankruptcy system… what is needed is pre-emptive financial management that enlarges local finances.”

Today the Ministry of Security and Public Administration reported to President Park Geun-hye its 2014 Business Promotion Plan (2014년 업무추진계획), which contains the substance of the bankruptcy system for local public entities.

MSPA head Yu Jeong-bok said that “a bankruptcy system for local public entities is not intended to implement restrictions of last resort when an elected official commits financial mismanagment rather than shift the responsibility for a bankruptcy onto the citizens… this will lead to a return to sound financial management.”

The bankruptcy system for local public entities is intended to have the government or high-grade agencies intervene to promote the financial recovery of local public entities which have defaulted on loans or committed other acts that make it difficult to recover financially.

It is different from the bankruptcy system for businesses, which involves the dispersal or liquidation of legal persons. It is similar to the work-out system in which a business that still has value is saved through a restructuring.

Law allows Korean employers to avoid holiday pay

February 12th, 2014 · Economy and Worklife, Legal news · 0 comments

Original article in Korean is at this link.

<Anchor comment>

The number of “red days,” public holidays on which there is no work, total 67 this year.

You may think that you would receive extra holiday pay if you go into work on a holiday, but there many times that is not true.

On Seollal, Chuseok, and other holidays as well as national holidays and Christmas, you might not receive holiday pay even if you work.

This is because of the holiday clauses in the Labor Standards Act (근로기준법상).

Ha Song-yeon reports.


Ms. Mo, who has worked in a supermarket for over ten years, worked for three days over the most recent Seollal holiday.

She worked from ten in the morning to ten at night but was not given holiday pay.

<Tape recording> Supermarket employee (voice disguised): “I never like going in on a holiday. I want to spend time with my family… I feel like exploited which is making me depressed. That’s why I’m speaking so frankly.”

The Labor Standards Act specifies that workers are to be paid 1.5 times their regular pay, or receive extra holiday time, for working on what would otherwise be a paid holidays.

However, current law specifies that only one day a week, in addition to the May 1st Labor Day, are to be considered paid holidays.

Public holidays on which many citizens work are “official holidays,” that is, days when citizens don’t have to work because public servants don’t.

Whether an off day is to to be treated as a paid holiday is determined by a collective bargaining agreement.

That means that at 20% of businesses with at least 100 employees and the majority of small and medium enterprises do not give holiday pay because they have no such agreement.

The result is that not a few companies include compulsory annual vacation days with official holidays.

<Interview> Shin In-su (Attorney): “There is an urgent need for the Labor Standards Act to be reformed so that ordinary workers’ vacation time is treated the same as those in government service when it comes to legal holidays.”

 The government has so far declined to play the role of labor negotiator, so the complaints from workers in small businesses are only increasing.

This is Ha Song-yeon for KBS News.