‘Donjanchi’ Discipline Enforcement... Financial Sector Moves Forward with ‘10 Trillion + Hiring Expansion’

Normalization of Business Hours 'Lukewarm'
‘Stingy’ in Hiring and Other Areas

[Asia Economy Reporter Yoo Je-hoon] Following the announcement of social contribution plans exceeding 10 trillion won by the financial sector, an expansion of recruitment scale for the first half of this year was announced within a week. This comes amid criticism that the financial sector, including commercial banks, enjoys the benefits of soaring interest rates through massive bonuses and retirement allowances, yet remains stingy in hiring new young employees.

On the 20th, financial associations representing various sectors?including the Korea Federation of Banks, Korea Financial Investment Association, Korea Life Insurance Association, Korea Non-Life Insurance Association, Korea Credit Finance Association, and Korea Federation of Savings Banks?simultaneously announced plans to expand recruitment numbers for the first half of the year. This is a follow-up measure in response to the financial authorities’ request for increased hiring at a youth employment meeting held on the same day.

By sector, the banking sector showed the largest recruitment scale. Banks plan to hire 2,288 new employees in the first half of this year, a 48% increase compared to the previous year. The financial investment industry (1,035), non-life insurance industry (513), life insurance industry (453), specialized credit finance industry (279), and savings bank industry (151) followed. In total, about 4,700 new hires will be made in the first half alone.

The financial sector’s move to significantly expand recruitment is interpreted as a response to criticism that, despite profiting from interest rate hikes, it has been reluctant to hire new personnel.

For example, the scale of new hires in the banking sector approached around 3,000 annually until about 2018 but dropped to about 1,000 around 2020-2021. This was due to reduced demand for face-to-face transactions amid the COVID-19 pandemic and reductions in branches and staff due to digital transformation.

However, despite negative effects such as worsened financial accessibility for vulnerable groups and frequent financial accidents, the financial sector faced criticism for holding record-breaking bonus distributions. Even as commercial banks reduced branch numbers and shortened business hours citing COVID-19, the total bonuses of the five major banks increased by 35% compared to the previous year, exemplifying this trend.

A financial sector official stated, "Even though financial transactions are trending toward non-face-to-face methods, key services like loans still have a significant face-to-face component, and vulnerable groups such as the elderly heavily rely on face-to-face services. If business hours normalization is lukewarm while massive bonuses are taken, which financial consumer would view this favorably?"

Kim So-young, Vice Chairman of the Financial Services Commission, also mentioned at the youth employment meeting that the financial sector should consider expanding internal controls, IT specialists, and ensuring accessibility to financial channels, emphasizing that "expanding personnel in related areas should be recognized as an investment, not a cost."

Meanwhile, the government’s efforts to enforce discipline are expected to accelerate. On the 23rd, the first meeting of the ‘Banking Sector Management, Business Practices, and System Improvement Task Force (TF)’?comprising the Financial Services Commission, Financial Supervisory Service, banking sector, academia, legal circles, and consumer experts?will be held to begin deriving improvement measures on issues such as dismantling the oligopoly system and compensation structures including bonuses and retirement allowances.

Regarding measures to dismantle the oligopoly, options under consideration include licensing a fourth internet-only bank and subdividing banking licenses into 'small licenses.' For compensation systems, the government is reportedly reviewing systems such as 'clawbacks,' which recover profits if problems arise in financial companies, and 'say-on-pay,' which requires shareholder meetings to review the remuneration of CEOs and executives.

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