Financial sector is chopping pay, mulling layoffs

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Financial sector is chopping pay, mulling layoffs

As the deceleration of the economy becomes more obvious, financial companies are tightening their belts not only by cutting wages but also encouraging employees to take long unpaid leaves.

Some companies in the nonbanking finance industries are contemplating the idea of layoffs.

NH Financial Group, a financial company spun off from Nonghyup Group earlier this year, has decided to cut salaries of its management level employees’ by10 percent this year. Paychecks for the management at its seven affiliates including flagship NH Bank will be cut 10 percent through December. To save costs, the group has also stopped sending its employees overseas for training.

The moves came after the group announced an emergency management mode last month.

“It was inevitable to launch an emergency management system as the economic slump is getting worse,” said an official at the group.

KB Kookmin Bank, the nation’s leading lender, is fiddling with the idea of a system in which employees will go on unpaid breaks this year. The bank will pay for the first five days of a vacation and not pay for the next five days. The bank is ready to adopt the idea immediately once it is approved by employees.

Shinhan Bank is encouraging its employees to take their full 10 days of unpaid vacation, a system that the bank has used since 2010. Hana Bank is planning to make sure employees use their 10 days unpaid vacation plus five additional days. The idea is to cut costs.

The situation in the nonbanking sector is worse.

Major insurance companies such as Samsung Life and Samsung Fire and Marine, which went through a corporate restructuring last year, are said to be considering layoffs this year. Samsung Life in the April-June period saw its net profit shrink nearly 10 percent to 242 billion won ($214 million). As of March, its market share in the life insurance market fell 0.18 of a percentage point from a year earlier to 25.81 percent.

Some credit card companies including Hyundai Card are already in the process of laying off employees. Analysts estimate about 10 percent of the employees will be packing up their desks.

By Lee Ho-jeong []

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