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Protest must not fall on deaf ears

Published: 17 Oct. 2011, 20:48

The Occupy Yeouido demonstration against corporate greed and economic inequality that took place in Seoul’s financial district on Saturday ended without a major clash with the police and paled in comparison to the protests on Wall Street that inspired it.

Unlike solidarity actions that were marshaled online in other parts of the world, the rally in Seoul was hastily organized by anti-government organizations and drew a lackluster response. But unless jobs are created for younger people, resentment and rage against financial inequality could explode in the country at any time.

The income divide is less severe in Korea than in the U.S., but the financial sector is significantly different. And while financial companies here are roughly as productive as manufacturers, average wages at the former are more than double the gross national income per person. In contrast, financial companies in the U.S. pay their staff slightly less than the GNI per capita. Employees in Korea’s financial sector are often criticized for being overpaid and overindulged. The companies are bailed out with public funds if they run out of money due to poor management, yet treat themselves to overinflated dividends and bonuses upon turning a profit.

Commercial banks raked in a net profit of 2.26 trillion won ($1.98 billion) in commissions from their credit card services in the first half of the year. Commission-based revenue at credit card companies also reached 4.96 trillion won in the first half, up 19 percent from the same period one year earlier.

Revenue increased despite credit card companies lowering the commission charges at their affiliated outlets two times since last year. Financial companies have resisted cutting commissions, citing investment costs, but they should regard commissions as incentives to improve customer service rather than merely a revenue base.

Authorities should stop pampering and protecting financial companies. They must encourage banks to use profits to boost loss reserves instead of rewarding staff and shareholders with fat bonuses and dividends if they want to avoid further bailouts.

The government should also promote competition among financial companies to encourage them to lower costs like commissions and to get them to trim their nonoperating costs by making payroll systems for employees more rational. Financial companies should heed the global protest movement and make amends.