[Editorial] Stop Prejudice Against Employee Share Ownership

Daewoo Shipbuilding & Marine Engineering Co., Ltd and three other companies about to be sold off after a government "work out" process might be purchased in part by an employee stock ownership association. The idea their unions have is to assume 10 to 20 percent of their companies so as to maintain a balance against the majority shareholder and in doing so build a management structure that keeps ownership and management separate.

Creditors and conservative media are already waving their hands in objection, but they should not be. Creditors complain that they would not be able to receive the right "management premium" and so they would recover less of the public funds that went into restructuring, and because there supposedly would not be responsible management. The conservative media say the unions are demanding special privileges now that public funds have saved their companies, and portraying them as having no sense of shame.

It is sad because it seems the wall of prejudice is think when it comes to the belief that a company has to have a single "owner" and that unions are always out to get a bigger share of the pie. The companies that are to be sold off after being brought back to life collapsed largely because of jaebeol ownership structures. Existing jaebeols are one thing, but if these companies get absorbed back into jaebeols once again it will be even longer before there is an improvement in how jaebeols are operated. Special privileges would be a problem, but unions should not be prevented from owning stakes in their companies as the law allows. Furthermore it would be desirable to give workers a greater opportunity to participate by giving additional points for soundness in a company's ownership structure at bidding time. Doing that would allow for the development of diverse ownership structures.

Sometimes they assert that management with worker participation is possible only at small companies, but that makes you want to ask them if they know what they are talking about or if they are just being unreasonable. The American company SAIC ranks among the Fortune 500, and Eircom in Ireland and Spain's Mondragon are all partially worker-owned companies that perform outstandingly. How do they explain that? Ssangyong is 19.4 percent employee-owned, and is an ample demonstration of the potential that exists. The opportunity to bring change to corporate ownership structures must not be lost because of prejudice and an obsession with an immediate maximization of the selling price.

The Hankyoreh, 26 October 2005.

[Translations by Seoul Selection]