Banks Leading Part Time Labor Reform

In the banking sector, the transition of irregular workers to regular workers is gaining momentum.

Last December, Woori Bank’s labor and management agreed on the transition of 3,100 irregular employees to regular status. Dong-A Ilbo found out on January 3, that the labor and management board of Kookmin Bank and Korea Exchange Bank decided to deliberate on the issue during the first half of this year.

Other commercial banks, including Shinhan and Hana Banks, are bracing themselves for the shift, thinking the issue is unavoidable in principle while they expressed concerns about the cost of abrupt transition.

The business communities says that unilateral demand for the transition amid the rigid labor environment in Korea can cause many problems, keeping a close eye on whether the trend will affect other sectors, including manufacturing.

Transition toward regular workers may bring problems-

The reason behind the banking sector’s hurried movement is the irregular worker protection law, which will be in force in July. Under the law, irregular workers will get regular worker status after two years of working in one company. The banks came forward to embrace the new law.

“The discussion of turning irregular workers to regular employees picked up steam with the Woori Bank’s decision in the run-up to the law’s coming into effect,” said Yang Won-mo, leader of the Kookmin Bank labor union.

An official at Korea Exchange Bank said, “After the collective bargaining on payment at the end of last year, the wage increase rate of irregular workers was 10 percent, three times higher than that of regular workers (3.2 percent), yet we came to a consensus that the transition of the worker status is essential to protect skilled irregular workers.”

Even after the transition, “rosy future” is not guaranteed, however.

Woori Bank intends to freeze the pay level of regular employees to secure 2.6 billion won needed in the transition. Yet not a few regular workers have grumbles, raising concerns of a labor-labor conflict.

For their part, irregular workers also have complaints even though they can enjoy increased employment stability.

“Among seven job categories within the bank, four are done by regular workers and three are by irregular workers. Employee’s jobs are divided and run separately, so the transition is not the integration of the two groups. The work categories eventually lead to discrimination against irregular workers because recruit and promotion systems are separate by job category, like the segregation by gender that was abolished in the early 1990s,” said the official of Woori Bank.

Korea Financial Industry Union is for the transition of irregular workers to regular employees but against the work category system.

Ensuring flexibility is the issue-

In banks with many females at bank windows, the job category system is regarded as hot potato along with the transition issue. Take “window work category system” in Hana Bank as an example.

Seoul Regional Ministry of Labor of South Korea filed a lawsuit against the bank on the system in 2005 to the prosecution for gender discriminatory factors. The prosecution cleared the suspicion, yet the system remains a cause for controversy in the domestic financial sector.

The banks that filled those at the windows with irregular workers after the financial crisis have transformed some 100 workers into regular ones annually over the past two or three years.

There still remain the problems that the banks have to solve, like inevitable usage of irregular workers, part-time workers and private police officers.

“With record-high profit last year, the banks are taking the lead in the transition, yet the consequences of increased labor costs could bring about exodus of companies to foreign countries. We have to make a compromise while living up to the spirit of the irregular worker protection law,” said Hahm Shi-chang, economics professor at Sangmyung University.

Ryu Gi-jung, bureau chief of Korean Employers Federation, raised concerns that “Employment flexibility is too low in Korea to apply the shift of irregular workers to regular employees in the banking sector to manufacturing industries. Regardless of different ability and circumstances of each company, a unilateral request for the transition would bring about a social confusion.”

kimsunmi@donga.com