One Out of Five Laid Off Donghwa Bank Workers Living Below Poverty Line

Six years have now passed since Donghwa Bank was liquidated from the market. At the time, most employees of Donghwa Bank led comfortable middle-class lives, but now one out of five former employees have fallen to the poverty level, and 65.5 percent of the employees earn less than what they used to earn six years ago.

Not even one employee has found a new job through the job-training course offered by the government, proving that the Korean society’s safety net and job training courses are not effective at all.

Such facts were found by tracing 229 former male employees of Donghwa Bank over the age of 28 at the time of the liquidation, through direct interviews or telephone interviews with Dong-A Ilbo reporters. Those that were unable to be reached or refused to be interviewed were excluded from the inquiry. Donghwa Bank was sent off the market along with four other banks, including Daedong and Dongnam Bank, in late June of 1998. In the aftermath, about 1,500 employees that at the time belonged to the highest paid office worker class lost their jobs overnight.

Out of those 229 former employees that responded to the interview, 32 (14.0 percent) had their economic status improved, 47 (20.5 percent) kept their status quo, while an overwhelming 150 (65.5 percent) employees had their economic condition worsen compared to that of 6 years ago.

In particular, 45 (20.5 percent) out of the 150 employees that were worse off after the layoffs now belong to the poor class. Their annual income is below 13.8 million won, which corresponds to the bottom 20 percent of urban working household incomes.

The employees that had their economic status improved were those whose income increase rate was greater than the average income increase rate of urban working households of 41.8 percent from 1998 until June of 2004. Those maintaining the status quo were those who did not have any changes in their income, or whose income increase rate was below the average increase rate. Lastly, workers whose economic status worsened were those who had their actual incomes decreased.

Considering the price increase rate of the past six years of 21.1 percent, 161 out of 203 employees, or 79.3 percent, had their assets reduced, while 23 workers, or 11.3 percent, had lost assets and become indebted.

Park Sun-chul, 44, who at the time was the leader of the Donghwa Bank labor union and now runs printing business, said, “The hundreds of employees that cannot be reached are mostly living through economic hardships. The actual lives of the laid off workers is much worse.” Out of the 229 employees interviewed, 84 work as irregular workers, 73 as regular workers, 52 are self-employed and 20 are currently unemployed.

Furthermore, 62 employees had run businesses such as restaurants, pubs, clothing shops, and video arcades, but 80.7 percent, or 50 employees, failed, while only seven employees, or 11.3 percent, succeeded, and five former workers (8.0 percent) were doing average. If their first ventures failed, they tried other business two to four more times, so in reality, the success rate for their self- employed businesses was lower than five percent.

According to Korea Labor Institute researcher Lee Shi-gyun, “The number of white-collar workers who were laid off during and after the foreign exchange crisis and fell into the poor class is quite significant.” He also pointed out, “That is due to the combination of a faulty social safety net, job training courses that are not fit with reality, a bank culture that did not breed professional workers, society’s misconceptions towards the laid off workers, and wrong illusions about running their own businesses, among other elements.”