As IBK Opens the Door, FSS Says "Let Us Too"... 'Total Personnel Expense Cap' Debate Surfaces

"Only Half of Overtime Pay for 20 Extra Hours Worked"

IBK First to Initiate Talks... FSS Closely Watching the Outcome

The Financial Supervisory Service plans to request the Financial Services Commission, its parent agency, to resolve the issue of unpaid overtime allowances caused by the government’s total personnel expense cap. As the Financial Services Commission has recently taken a forward-looking approach to addressing overdue overtime allowance payments at IBK Industrial Bank of Korea, the Financial Supervisory Service has determined that the same measure is necessary for fairness.

According to financial authorities on March 12, the Financial Supervisory Service is closely monitoring the discussions between Industrial Bank of Korea and the Financial Services Commission regarding the total personnel expense cap. An official from the Financial Supervisory Service stated, “Industrial Bank of Korea is currently discussing the issue of the total personnel expense cap with the Financial Services Commission, and the Financial Supervisory Service is facing the same structural problem.” The official added, “As employee dissatisfaction grows, if there is an official request at the union level, we may consider asking the Financial Services Commission to improve the system.” He further commented, “We are watching the results of Industrial Bank of Korea’s discussions.”

Currently, employees at the Financial Supervisory Service work an average of about 20 hours of overtime per month. However, there are significant differences among departments, and in departments with heavier workloads such as supervision and inspection, overtime hours reach around 30 hours. In practice, only about 10 hours of overtime per month are recognized for allowance payments, with the remaining hours accumulated as compensatory leave. This has effectively resulted in 'unpaid wages.'

The root cause of this issue is the total personnel expense system applied to public institutions. Since each institution’s annual personnel expenses are capped, public and quasi-public organizations like the Financial Supervisory Service or Industrial Bank of Korea must convert part of the overtime allowance into compensatory leave if it exceeds a certain limit. However, due to the heavy workload, employees are often unable to use all of their accrued leave, leading to the accumulation of effectively unpaid wages.

In the case of the Financial Supervisory Service, this problem has been continuously raised since the system was introduced in 2009. However, adjusting the total personnel expense cap requires approval from the Financial Services Commission and the Ministry of Economy and Budget, among other relevant agencies, so the issue has not been resolved. The government has been reluctant to address the problem, citing the considerable financial resources involved and the complexity of the agencies affected.

The recent shift in attitude is due to the case of Industrial Bank of Korea. President Lee Jaemyung ordered the resolution of the unpaid wage issue arising from the total personnel expense system during a Financial Services Commission work report last year, accelerating discussions. Additionally, as the Industrial Bank of Korea union staged a protest to block the new president, Jang Minyoung, from entering the office and demanded a solution to the total personnel expense issue, the Financial Services Commission also began to review system improvements more proactively.

As a result, the total personnel expense issue has become a key agenda item within the Financial Supervisory Service. Although it has repeatedly failed to be resolved due to government inaction, there is growing hope for improvement following the Industrial Bank of Korea case. In particular, the upcoming election for the Financial Supervisory Service union president is expected to focus on resolving this issue, and it is reported that related pledges are likely to be included in candidates’ campaign platforms as awareness of the problem grows among employees.

Another official from the Financial Supervisory Service commented, “Although work such as virtual asset supervision, financial consumer protection, and public interest finance continues to increase, the staffing level is capped, so the workload per employee is also increasing.” The official added, “The more work we do, the more unpaid allowances accumulate, so resolving the total personnel expense issue is essential.”

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