[Friday Story] 10,000 People Left 5 Major Banks in 3 Years... Accelerated 'Retirement Clock'

'Cheolbaptong' Bankers Are a Thing of the Past
8,661 Voluntary Retirements from 2017 to End of Last Year
Number Expected to Reach About 9,760 by Early This Year
Process Carried Out Without Labor-Management Conflicts Unlike Before
Applications Surge Due to Benefits Like Special Severance Pay

[Asia Economy Reporter Kim Min-young] It has been revealed that approximately 10,000 bank employees from the five major banks have taken early retirement through voluntary retirement programs over the past three years. This trend is attributed to the acceleration of the "retirement clock" due to early retirement prompted by the introduction of the wage peak system, as well as the atmosphere of "let's leave while we can" fueled by retirement bonuses worth hundreds of millions of won. The government's job creation policies have also played a role in promoting voluntary retirement. Some critics point out that in a situation where branch offices are shrinking, a vicious cycle is repeating where resources are shifted from one area to support another, such as expanding new hires by cutting elsewhere.

According to the financial sector on the 17th, the number of employees who left through voluntary retirement from the five major banks?Shinhan, KB Kookmin, KEB Hana, Woori, and NH Nonghyup?between 2017 and the end of last year totaled 8,661.

Nearly 2,000 bankers have left or are expected to leave the banks at the end of last year and early this year. At the end of last year, 369 and 356 employees left through voluntary retirement at Hana and Nonghyup banks, respectively.

Kookmin Bank plans to finalize the scale of voluntary retirement within the day. The bank had 613 voluntary retirees at the beginning of last year. The bank expects a similar scale this year.

Shinhan Bank will also decide the final number of voluntary retirees by the end of this month. Last year, 230 employees packed up. Woori Bank plans to send off about 300 employees by the end of this month.

Assuming the number of voluntary retirees at Shinhan and Kookmin Banks remains at last year's level, the total number of retirees over the past three years is estimated to be around 9,760. This figure excludes natural attrition such as retirement upon reaching the mandatory retirement age.

A notable feature of recent voluntary retirements in the banking sector is that they have proceeded without major conflicts between labor and management. In the past, large-scale restructuring faced strong opposition from labor unions, but now, with substantial benefits such as special retirement bonuses, reemployment opportunities, and tuition support for children, applications from employees have surged.

Kookmin Bank, which sent off 2,795 employees in 2017, is a representative case. At that time, large-scale voluntary retirement was conducted for the 'L0' group, which had been converted from non-regular to regular employees, regardless of length of service, and it was completed without issues.

In the same year, Woori Bank also accepted its first voluntary retirement since privatization, sending off 1,011 employees without trouble. It is said that applications surged after raising special retirement bonuses to the level of other commercial banks (30 to 36 months of base salary).

Since then, the payment of special retirement bonuses and various benefits to voluntary retirees have become standard practice in the banking sector. At the end of last year, Hana Bank, which conducted voluntary retirement, paid 277 employees born in 1964 and 1965 an average of 22 and 31 months' wages respectively, along with tuition support for children (up to 20 million won per person), medical expenses (up to 20 million won), and 20 million won for reemployment and career transition support.

For 92 general employees aged 40 or older with more than 15 years of service, a "quasi-retirement special retirement" was applied, providing up to 27 months' average wages, tuition support, and medical expenses.

Nonghyup Bank's special retirement targets are employees born in 1963 or those aged 40 or older with more than 10 years of service. Nonghyup paid them special retirement bonuses equivalent to 20 to 28 months of average wages.

Woori Bank, where about 300 employees born in 1964 and 1965 are expected to take voluntary retirement, plans to provide special retirement bonuses equivalent to 30 months and 36 months of average wages, respectively.

Kookmin and Shinhan Banks offer similar benefits. A source from a commercial bank hinted, "There is a sentiment that it is better to take the special retirement bonus worth hundreds of millions of won and prepare for a 'second act in life' rather than failing to be promoted to manager or branch manager, which are considered the 'prime' positions for bankers."

From the banks' perspective, this helps resolve the inverted pyramid structure and creates capacity to hire many young employees for digitalization. With the activation of digital finance such as internet and mobile banking, non-face-to-face transactions are increasing and branches are decreasing, so the need for workforce reduction remains high. The number of branches of the five major banks decreased by 46 from 4,332 at the end of September 2018 to 4,286 at the end of September last year.

The government's job creation policy is also one of the factors increasing voluntary retirement. The government has continuously exerted implicit pressure on banks to let go of older employees and increase youth employment. In response, the banking sector has conducted large-scale recruitment every year. The five major banks hired 2,437 new employees in 2017, 3,408 in 2018, and 4,190 last year.

Some criticize the practice of hiring new employees equivalent to the number of voluntary retirees as "taking a stone from the top to support the bottom." Bank management needs to strategize within the broader framework of workforce restructuring due to economic recession and declining profitability in the banking industry, but a vicious cycle repeats where the parent generation is let go and the child generation is employed on a larger scale.

In fact, the number of bank employees has not changed significantly. The number of employees at the five major banks decreased by only 606, from 69,199 at the end of September 2018 to 68,593 at the end of September last year.