Fate of 9,000 Employees Uncertain After LH Split... Union Warns "Labor Action Possible If Employee Choice Is Violated"

No Negotiation Channel Between Labor, Management, and Government Yet
"Union Members' Feedback Must Be Reflected in the Reform Plan"
First In-Person Negotiations Could Take Place by End of This Month
Concerns Over Reluctance for Certain Assignments Based on Financial Conditions

Labor-management negotiations and discussions between the government and the union concerning the potential division of Korea Land and Housing Corporation (LH) are expected to begin as early as the end of this month. While the LH labor union maintains that the decision to split the organization itself is not subject to labor disputes, it has stated that it will respond strongly—including considering strikes—if employee choice or job security is threatened. Key issues in the negotiation are expected to include which entity will bear the debt and how the more than 9,000 employees will be reassigned.

Korea Land and Housing Corporation (LH) Seoul Regional Headquarters, Gangnam-gu, Seoul. Photo by Yonhap News

According to the Ministry of Land, Infrastructure, and Transport on September 13, First Vice Minister Kim Itak held a "kickoff meeting for the LH organizational reform" with LH President Lee Sunghoon and others on September 11 in Seoul to begin outlining a roadmap for organizational restructuring.

Vice Minister Kim said, "Since August last year, the direction for the LH organizational reform has now been set through discussions involving the LH Reform Committee, among others," and continued, "It is time for the Ministry and LH to work together as a one-team approach to implement the restructuring." He added, "We plan to keep the headquarters of each entity in Jinju, and we will ensure that employees do not suffer disadvantages in terms of pay or treatment."

On September 3, the government announced its plan to split LH into two corporations as part of the "Public Institution Function Reform Plan." Land development and housing construction will be managed by the tentatively named "Housing and Urban Development Corporation," while public rental housing and residential welfare will fall under the tentatively named "Housing and Urban Assets Corporation." This is the first time in 17 years since the 2009 merger of the Land Corporation and Housing Corporation to form LH that the organization is set to be divided again.

The decision to split rests with the government, but workforce allocation will be a central point in labor-management-government negotiations

The LH labor union is less concerned about "whether" to split the entity and more focused on "how" the division will be conducted. A union representative commented, "We have not yet been informed about workforce allocation, post-division financial measures, or follow-up cross-subsidy plans," adding, "Member feedback must be incorporated in developing the specifics." The representative continued, "Although the division itself is not a subject of dispute, if employee choice or job security is compromised, it could become a matter for collective bargaining and industrial action. If negotiations break down, a general strike is also possible."

Should the issue of workforce allocation spark labor-management conflict, the restructuring schedule could be disrupted. Following the implementation in March of the so-called "Yellow Envelope Act" (amendments to the Trade Union and Labor Relations Adjustment Act), even managerial decisions that impact working conditions can be considered legitimate grounds for labor disputes.

However, the decision to split a company does not automatically make it a subject for negotiations or dispute. The Ministry of Employment and Labor recently clarified in its "Yellow Envelope Act Labor Dispute Guidelines" that decisions related to restructuring, such as company splits, are not mandatory negotiation items. At the stage where only the policy for division has been announced, changes to working conditions are merely "possible," so negotiations or disputes are not warranted. Only when issues like workforce allocation are confirmed and there is an objective expectation of changes in working conditions do employment stabilization measures become legitimate topics for negotiation.

Union response intensifies with the split proposal ... First negotiations expected by the end of this month

Discussions on the LH split surfaced in the public domain several months before the recent announcement. After President Lee Jaemyung directed the Ministry of Land, Infrastructure, and Transport in a year-end work report last year to consider separately managing rental business-related debt and assets within LH, various restructuring scenarios were introduced in the media.

The LH union also shared its views during this process with the Reform Committee and requested detailed information from the Ministry. However, as the Reform Committee's activities essentially halted at the start of this year, there were fewer formal channels to voice union positions. Even when asking the Ministry for information regarding workforce assignments and financial separation, the typical response received was that the matter was still "under review."

When the government officially announced the division plan on September 3, the LH union escalated its response. On September 4, it issued a statement expressing concern about a hasty overhaul and called for thorough preliminary consultations. On September 9, it requested formal negotiations with LH management and asked the Ministry to form a labor-government consultative body and to hold separate talks. Management publicly announced the receipt of the negotiation request, and after completing the single bargaining channel process, initial negotiations are projected to take place as early as September 30.

Especially noteworthy is that the financial condition of the proposed "Housing and Urban Assets Corporation," which will oversee rental housing and residential welfare, has become a sensitive variable in employee placement. If the new entity is saddled with a significant portion of LH's approximately 174 trillion won in debt, concerns have been raised that this could influence management evaluations and employee pay and bonuses. As a result, a growing number of employees may be reluctant to be assigned to a specific entity, and if labor-management conflict concerning personnel matters intensifies, the restructuring timeline could also be affected. Of LH's more than 9,000 employees, about 7,700 are union members.

The LH union believes that, considering the need to revise the "Korea Land and Housing Corporation Act," separate finances and manpower, and resolve labor-management disputes, the actual split will take at least one year, and possibly more than two. The government has yet to announce a specific schedule. An official from the Ministry of Land, Infrastructure, and Transport stated, "Concrete details such as personnel allocation and organizational restructuring will be included in the LH reform plan, but the release date has yet to be determined."

This content was produced with the assistance of AI translation services.