As the Lee Jae-myung administration pursues a state agenda to completely end coal power generation by 2040, labor's voice is expected to grow further during the power industry transition. That is because a labor-government consultative body launched by the prime minister's directive is set to be operated under labor union leadership.
Some warn that labor-government consultations will not be easy. With finances tight, the government will find it hard to readily accept labor's demands. Labor groups are calling for a special law that would, if coal power is abolished, provide subsidies to unemployed workers for up to five years based on their average income at the time of employment, among other measures.
According to the government on the 24th, Prime Minister Kim Min-seok presided over the "appointment ceremony for Commissioners of the Power Industry Just Transition Consultative Body" on the 22nd. The consultative body began activities on Aug. 13, but became an official organization belatedly after a directive was established on the 17th.
The consultative body aims to hear workers' views on jobs and related issues during the transition to eco-friendly energy and to discuss support measures. It also serves as a forum to devise measures to prevent a recurrence following the death of subcontracted worker the late Kim Chung-hyun at Korea Western Power (KOWEPO)'s Taean Thermal Power Plant on Jun. 2.
In addition to the prime minister's office, the Ministry of Economy and Finance, the Ministry of Trade, Industry and Energy, and the Ministry of Employment and Labor are participating in the consultative body. The industry ministry is responsible for policies related to substitute industries during the transition, the finance ministry handles policies related to public institutions including power generation public corporations, and the labor ministry focuses on on-site safety and employment protection.
The consultative body is composed of 17 Commissioners, including four representatives each from labor and government, and eight experts. The Chairperson is Kim Chang-seop, a professor at Gachon University.
An official at the prime minister's office said, "Labor unions will take a leading role in the consultative body by setting the agenda, with private experts and the government participating in the discussions," adding, "We will pursue a gradual transition of the power industry."
The Lee Jae-myung administration recently announced through 123 state agendas that it would expand the adoption of renewable energy and fully abolish coal-fired power generation by 2040. It will begin phased closures at the end of this year, starting with Unit 1 of the Taean Thermal Power Plant.
In this transition, thousands of jobs are expected to disappear, and losses to regional economies will be inevitable. According to the results of a research project conducted by the industry ministry in 2021, in South Chungcheong Province alone, where coal power plants are concentrated, a 19.691 trillion won decrease in production inducement, a 7.985 trillion won decrease in value-added inducement, and a reduction of 7,701 jobs were projected.
The government plans to designate areas where coal power plants are abolished as "just transition special zones" and roll out policy support by continuously identifying transition sectors such as internal combustion vehicles and steel.
However, there are concerns that difficulties are expected in the process of deriving new measures through the consultative body. Labor circles have demanded the enactment of a special law that includes grounds for supporting the unemployed and local residents affected by the abolition of coal power.
Multiple bills have been introduced by both the ruling and opposition parties. The bills include provisions to provide subsidies for up to five years based on average wages at the time of employment, and to give priority in employment subsidies to corporations that invest in abolished areas.
They also include: ▲ tax deduction for local residents and operators of substitute industries ▲ partial or full support for funds to be投入 for fostering substitute industries ▲ establishment of a "just transition support fund" using the climate response fund and government contributions.
This is a measure that is hard for the government, which is pursuing expansionary fiscal policy to boost the economy, to accept easily. According to the '2025–2029 National Fiscal Management Plan' submitted by the government to the National Assembly, the government debt ratio is expected to surpass 50% in 2028 from 49.1% this year. The Bank for International Settlements (BIS) analyzed the surpassing point to be 2026, two years earlier.
A government official said, "This is an early stage in which discussions are underway, so it is difficult to state a position on labor's demands until results come out."
Son Jong-pil, senior research Commissioner at the Fiscal Reform Institute, said, "While there is a need to prepare separate government support measures related to a just transition, the private sector, including thermal power corporations, should share the expense to realize policy tasks," adding, "We need to move beyond simple fiscal issues such as subsidies and continue forward-looking discussions centered on 'how to preserve decreasing jobs.'"