Labor ministry finds 90 cases of improper welfare fund use at 82 funds

The labor ministry said Thursday that a full inspection of South Korea's 5,308 workplace and joint workers' welfare fund corporations found improper management in 82 of them, with 90 cases ranging from unsigned charter changes to benefits steered to a handful of employees.

The inspection ran from April 1 to Sept. 30 and checked whether the corporations' programs were being run properly for workers' welfare under the Framework Act on Labor Welfare.

Exceeding the legal spending limit accounted for the largest share of the findings at 45 cases. Corporations may spend no more than 90 percent of the contributions they receive in a given year. Another 20 cases involved charters revised without the required approval, while 12 allowed benefits to go to people other than workers, including executives and institutional heads. Seven involved spending outside the fund's mandate, such as a company covering stock options or summer vacation pay it was obliged to provide itself, or running programs the charter did not authorize. In six cases more than half of the fund's basic assets had been lent to employees making up 10 percent or less of the workforce.

Public-sector funds accounted for seven of the cases across five corporations, including public institutions, their subsidiaries and local government-owned companies. The remaining 83 cases were found at 77 private-sector corporations.

One case in which a former employer misappropriated fund money has been referred to prosecutors on suspicion of violating the labor welfare law. The ministry said it had ordered immediate correction in the other 89 cases and would complete follow-up measures by the end of the year, including applications to approve revised charters and directions to employers to make additional contributions.

"Improper management of workplace and joint workers' welfare funds is a serious matter that directly affects the welfare of workers at small and struggling businesses in particular," Labor Minister Kim Young-hoon said.

The ministry said it had already tightened the rules governing the funds, expanding the documents funds must submit for operational reviews and adding checks on whether their programs are appropriate, effective this month. A change in August requires funds to report withdrawals so that welfare programs are not shut down.