Banks promise to shed contract employment

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Banks promise to shed contract employment

Banks have joined the Korean government’s effort to reduce the number of contract workers in the country by turning their contract employees into salaried ones.

The Industrial Bank of Korea, a state-run bank, said Wednesday that it plans to convert some of its contract-based staff into regular workers. The move is in line with President Moon Jae-in’s push to end contract employment in the public sector.

Contract employment does not come with the same level of pay and benefits as salaried employment. Multiple media outlets reported that the bank would turn all 3,000 of its contract employees into salaried ones.

Most of them are bank tellers hired under permanent contracts that don’t offer the same level of stability as salaried positions.

A spokesperson for the bank though said that details have yet to be determined.

“It is true that we established a task force for the transition of workers’ status into permanent positions at the end of last year when the new bank president, Kim Doh-jin, was inaugurated,” the spokesperson said. “But we are still in talks about the specific scope and timeframe. I believe that it will be hard to be done within this year.”

The decision follows an announcement from Citibank Korea that it would turn 300 contract jobs into permanent positions.

The company said Tuesday that Park Jin-Hei, president and CEO of Citibank Korea, had sent an internal email notify employees of the change.

“Under the seniority-based salary structure and accumulative severance program that is unique to Citibank Korea, the agenda to change contract employees to regular staff has been a part of an agreement on the management of contract employees,” the president said in the email.

“In pursuit of a broader benefit, however, we will convert about 300 open-end contract tellers/general clerical employees to regular staff this year.”

The bank used to turn only 20 percent of contract workers into permanent posts, but this year, all 300 positions will be converted.

Now, attention has shifted to the country’s four major commercial banks, Shinhan, KB Kookmin, KEB Hana and Woori. At those banks though, only a fraction of workers - about 5 percent - are hired for temporary positions.

Alongside employment status, there’s other change anticipated in the salary system.

Under Moon’s predecessor, Park Geun-hye, the government pushed for wider adoption of a merit-based salary system in the banking sector, but the initiative faced backlash from banks’ labor unions.

President Moon has expressed a cautious approach toward the initiative, and under his watch, the move will likely be scaled back or simply left to wither.

The Korean Financial Industry Union, a labor group representing workers at 15 commercial banks, went on strike last year to protest the government’s push to expand its merit-based salary system to include junior-level employees.

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