KB Kookmin and IBK Industrial Bank 'Labor-Management Conflict' May Prolong... Series of Strikes Looming

Unable to Bridge the Gap Over "Performance Bonuses"... IBK Industrial Bank's General Strike Followed by KB Kookmin Bank Union's Strike Announcement
IBK Industrial Bank Union Plans Additional General Strikes Led by New Executive Team
KB Kookmin Bank Union to Announce Its Position on the 22nd
IBK Industrial Bank Faces Increased Risk of Losing Ordinary Wage Lawsuit After 24 Billion KRW Financial Accident

The conflict between labor and management at IBK Industrial Bank and KB Kookmin Bank is deepening. Differences in opinions over the size of performance bonuses have not been resolved, showing signs of prolonged disputes. In particular, IBK Industrial Bank is facing a triple crisis due to a financial accident worth 24 billion KRW and the increased possibility of losing a lawsuit over ordinary wages.

As stock-linked securities (ELS) based on the Hong Kong H-Index are expected to incur losses amounting to trillions of won in the first half of this year alone, financial authorities have begun on-site inspections targeting major distributors. Photo taken on the 8th at KB Kookmin Bank, Yeouido, Seoul. Photo by Kang Jin-hyung aymsdream@

According to the financial sector on the 17th, the KB Kookmin Bank labor union held a strike vote on the 14th and resolved to strike with 95.59% approval (voter turnout 88.22%). If the strike proceeds according to this resolution, it will be the first in six years since 2019. The KB Kookmin Bank labor union plans to release a statement regarding the strike on the 22nd.

The KB Kookmin Bank labor union is currently demanding ▲performance bonuses of 300% (based on ordinary wages) + 10 million KRW ▲a wage increase rate of 2.8% ▲expansion of new hires ▲increase in congratulatory and condolence money ▲improvement of medical expense support system ▲improvement of the wage peak system.

Earlier, the KB Kookmin Bank labor union declared a breakdown in negotiations on the 26th of last month and applied for labor dispute mediation to the Central Labor Relations Commission under the Ministry of Employment and Labor, but no agreement was reached, and the commission decided to suspend mediation. A KB Kookmin Bank official explained, "We are continuing negotiations to avoid a strike by maintaining dialogue."

The IBK Industrial Bank labor union also conducted its first-ever strike in the bank’s 52-year history on the 27th of last month due to wage discrimination and unpaid allowances, and the new executive team has expressed intentions to proceed with second and third strikes. The union claims that wages are 30% lower than those of commercial banks and demands ▲a special performance bonus of 250% of the base salary ▲6 million KRW per person in overtime pay ▲an increase of 1 million KRW in employee stock ownership.

A union official stated, "There has been no progress in negotiations after the strike," adding, "If the government and management do not show a willingness for active dialogue, the new executive team plans to proceed with additional strikes." The management, however, says it is difficult to meet the union’s demands as a policy bank that must comply with the government’s total labor cost standards.

Yonhap News

Following the labor-management conflict, IBK Industrial Bank also faced internal control issues after a financial accident amounting to 23.95 billion KRW occurred. IBK Industrial Bank announced on its website that a large-scale financial accident occurred due to breach of trust in the course of business. The bank discovered the financial accident through an internal audit and plans to file criminal charges against the related employees, but the Financial Supervisory Service is conducting a rigorous investigation considering that many current and former employees are involved.

This accident occurred mainly at a branch located in Gangdong-gu, Seoul, from June 2022 to November last year, during which real estate collateral prices were inflated to approve excessive loans. Industry insiders speculate that the amount involved could increase further as many current and former employees are implicated.

On top of this, risks related to ordinary wages have increased due to the Supreme Court’s remand ruling. The union and retirees filed a lawsuit against the management, claiming that excluding regular bonuses amounting to 600% of the base salary from ordinary wages since June 2014 was unfair. Although the union lost in both the first and second trials in 2016, the recent Supreme Court remand ruling has increased the possibility of winning. IBK Industrial Bank stated, "It is difficult to estimate the total amount to be paid, but we plan to form a task force (TF) to respond to the ordinary wage lawsuit and coordinate detailed matters."