[News Focus] Financial regulator, laborers split over incentives

Korea’s top financial regulator and a labor group remain divided over the government’s push to install incentive systems at state-run financial companies.

Both sides are adamant in their positions with the Korean Financial Industry Union planning to go on a strike, while the Financial Services Commission reiterated that it will enforce the system as part of reforms.

In a meeting with the heads of state-run financial companies Tuesday, FSC chairman Yim Jong-yong urged them to rapidly adopt the performance-based incentive culture.

The chief regulator cautioned that companies which fail to launch the system in time will suffer disadvantages.

“We will aggressively enforce measures that will freeze wages and expenses (of employees) at organizations that postpone the adoption of the system,” Yim said.

He added that they will further face consequences of budget and pay cuts.

Of 321 state-owned enterprises, Korea Securities Depository had the highest annual wage of over 100 million won ($85,250) on average, and that of Korea Asset Management Corp. had the lowest. However, KAMCO’s average wage of 79 million was higher than private financial companies.

Yim demanded that they, along with the Korea Development Bank, the Industrial Bank of Korea and the Export-Import Bank of Korea, adopt a new culture that can be reasonably accepted by the public.

However, the umbrella labor group KFIU has been against the government’s unilateral stance over the issue, saying that the regulator is going beyond its jurisdiction and intervening in labor-management relations.

As the FSC and management refused to listen to workers, the union has decided to push forward and officially protest against the Finance Ministry, the FSC and the National Assembly.

“The FSC’s enforced adoption of the system is an illegal guideline,” said Kim Moon-ho, chairman KFIU, adding that the management is suppressing the workers by unilaterally pushing it without holding talks.

Since late last month, the umbrella union group has been protesting, with plans to mobilize thousands of workers to hit the streets throughout this month.

The government has put reforms in the financial sector as a top priority, saying that public financial companies should no longer adhere to inefficient practices of giving incentives without individual merit.

The FSC said that it will seek to increase wages by 0.25 percent to 1 percent at financial companies that launched the incentive systems with full support from their unions.

By Park Hyong-ki (hkp@heraldcorp.com)