'70s and 80s Born Also Face Early Retirement' Historic Cold Wind in Finance Sector... Layoffs ↑ Hiring ↓

Banks, Card Companies, and Insurers to Accept Voluntary and Honorary Retirement Applications from Year-End
Target Expanded to Include 1980s Generation... Record-High Workforce Reduction Expected
New Hires at 5 Major Banks Down Over 30% Compared to Last Year
Performance Bonuses Likely to Decrease Further... 'Financial Sector Tightening Belts'

[Asia Economy Reporter Jo Gang-wook] The financial sector is facing a wave of layoffs. The scope of voluntary retirement, including honorary retirement, is expanding to include practical workers born in the 1980s, and there are even forecasts that the scale of staff reductions by banks will reach an all-time high. In addition, the financial sector is accelerating efforts to downsize by significantly reducing new hires.

From Banks to Card Companies and Insurance Firms... Staff Reduction Scale Expected to Reach Record High

According to the financial sector on the 17th, starting with commercial banks, card companies and insurance firms plan to accept voluntary retirement applications from the end of this year or by January next year at the latest.

Woori Bank announced yesterday that it will accept honorary retirement applications until the 28th. The target is those aged 54 or older (born in 1966). For those born in 1965 who have entered the wage peak system, a lump sum payment of 24 months' salary will be made, and for those born from 1966, a lump sum payment of 36 months' salary will be provided. Additionally, tuition support of up to 28 million KRW per child for up to two children, health check-up vouchers, reemployment support funds, and travel gift certificates worth about 3 million KRW will be provided. This year's support funds are at the same level as last year.

Earlier, NH Nonghyup Bank accepted honorary retirement applications until the 30th of last month. Compensation was significantly increased by subdividing age and years of service. In particular, those aged 55 (born in 1965) and 54 (born in 1966) this year will receive retirement pay equivalent to 35 and 37 months' salary, respectively. Also, voluntary retirement applications were accepted up to age 40 (born in 1980) this year, with 20 months' salary paid as honorary retirement pay. Additional job transition support funds are also provided. Employees aged 56 receive 40 million KRW in job transition support funds and 10 million KRW in agricultural product gift certificates, while employees aged 48 to 55 receive 10 million KRW in agricultural product gift certificates. As a result, it is known that 503 people applied for honorary retirement at Nonghyup Bank this year, an increase of 147 from 356 last year.

SC First Bank also accepted special retirement applications for employees aged 55 and over until the 2nd. Similarly, compensation was increased. Up to 38 months' salary and tuition support of 10 million KRW per child for up to two children are provided.

Major commercial banks such as KB Kookmin, Shinhan, and Hana Bank are also expected to conduct special retirement soon. After the personnel appointments for executives above the deputy head, whose terms end this month, voluntary retirement applications are expected to be accepted. The number of employees at the five major commercial banks decreased by 952 from 77,968 at the end of December 2018 to 77,016 at the end of June 2020. Especially, 629 employees were reduced in the first half of this year alone. There is a view that the total scale of voluntary retirement this year will increase more than in previous years, reaching an all-time high.

The insurance and card industries are no exception. The insurance industry already conducted voluntary retirement in the first half of the year at Hyundai Marine & Fire Insurance and Hanwha General Insurance. In the card industry, there are no specific plans for voluntary retirement, but workforce reduction is considered inevitable.

New Employee Recruitment at Five Major Banks Decreases by 30%... Performance Bonuses Also Expected to Decline

New hiring has also been drastically reduced. The scale of new employee recruitment at the five major domestic banks decreased by more than 30%, from about 2,300 last year to about 1,600 this year. Due to profitability deterioration caused by the COVID-19 pandemic, branch closures, and expansion of non-face-to-face channels, banks have reduced the recruitment scale for general employee positions to as low as one-fifth, making a hiring drought a reality.

Performance bonuses are also expected to decrease. Major banks paid up to 200% of the 2019 performance bonus at the beginning of this year. This is a significant reduction compared to the 300% maximum performance bonus for 2018. Especially this year, with the situation worsening due to COVID-19, the prevailing view is that bonuses will be agreed upon at most at last year's level.

A financial sector official said, "Due to the prolonged COVID-19 situation, increased non-face-to-face work, and the entry of big tech companies into the financial market, tight management has become inevitable," adding, "Large-scale changes such as voluntary retirement, restructuring, and organizational reorganization will proceed to improve management efficiency."

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