Gov't under fire for pressuring bank hiring

By Park Hyong-ki

Financial Services Commission Chairman Choi Jong-ku / Yonhap

The Financial Services Commission (FSC) is facing a backlash amid plans to launch an index in August measuring the jobs created by local banks.

Industry sources say the regulator is "intervening too much" into matters that are not part of its key oversight task.

They criticized the index, questioning how forcing local banks to hire more people has anything to do with maintaining financial market stability.

"What it is trying to do does not add up. Its key task is promoting financial stability. Enforcing employment would only make the labor sector inflexible and the market unstable," said a banking industry source.

The index would make it even harder for banks to maintain a "pyramid organization structure" in which a large number of people at the bottom consist of young employees, and a very few people at the top are senior employees.

The banks will face difficulties in letting go of the senior employees through their retirement programs. When this happens, they cannot hire younger people, the source said.

FSC Chairman Choi Jong-ku said in early June that the index will merely serve as a "tool" for the regulator to see the latest job data in the sector.

He added the FSC will not use it to "judge and evaluate" local banks.

The chairman discussed the index during a June 12 undisclosed meeting with chairmen of financial holding companies.

However, industry sources say they believe the FSC will use the index as a tool to apply pressure on the banking sector during both good and bad times.

In good times, it could show the index and tell them to hire more employees, even if the banks cannot afford to or do not need to as they are expanding their digital platforms.

In bad times, the regulator could tell them not to let any of their employees go to prevent an increase in the number of overall job losses.

"It would be like a teacher saying to a student, we won't punish you even if we find something odd in your backpack during inspection. And this turns out to be untrue almost all the time," said another industry source.

A third industry source said local banks are on board with the regulator to boost innovation and competition through digital technologies.

Also, they are behind ensuring market stability, customer protection and privacy as part of the FSC initiative promoting fintech.

"Banks inevitably will have to cut jobs as they are reducing the number of their offline branches and increasing their online services. Under the circumstances, the index will add pressure on costs," said the source.

Twelve commercial, regional and specialized banks such as NongHyup will have to provide job data and plans to the FSC for the index.

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