Financial authorities have set out to reform the salary system of banks in Korea, with Korea Development Bank leading way by introducing a new salary system for its tellers and staff in charge of the foreign exchange windows.
The salary system reform aims at to make the salary system based on profitability and toughness of the work. Wages will be lowered from the present level in the mid- to long-term to make room for new employees.
In a bid to reform its salary system, KDB separated its tellers and staff at the foreign exchange windows from the staff at other units effective Oct. 30. The move is targeted at differentiating the special salary allotment based on the responsibilities of the tellers and those in charge of foreign exchange windows. The KDB’s salary system includes the “basic wage” and “special responsibility allotment payment.” KDB wants to differentiate the latter for the tellers and forex staff.
From November, the two groups of workers will be paid under a “different responsibility allotment payment” system from staff in other units of the bank.
Officials of the bank said chances for promotions and transfer to other units have been increased with the new salary system, as such moves will depend on their abilities and experiences, even though most of them are only high school graduates.
They said the bank separated their “special allotment salary system” from other general staff as the system seemed unfair for them to compete with staff who graduated from colleges.
As of the Sept. 31, the number of tellers and forex staff numbered 465 out of the 2,959 total employees of the bank.
KDB also is considering its move to separate the investment banking section and some other units.
The financial authorities hope that the moves taken by KDB would be as a signal to other commercial banks to make similar moves and help to lower the salary levels of those banks so that they would be able to hire more staff with the money saved from the new salary systems.
An official of the financial authorities said the current salary system should be changed to an annual salary system, which would eventually be turned around as a salary system based on the responsibility of personnel to finally reduce the current salary levels of all banks in the country.
A vice president in charge of the Personnel Dep’t of a large commercial bank,said the key is to change the salary system to an annual salary system, but the move appears to be very difficult to achieve, with most of the banks having been used to a salary system based a “grade” methodology. It will take years to change the salary payment system, with the labor unions reluctant to the change, he suggested.
Gwangju Bank in Gwangju, South Jeolla Province has decided to integrate the “5th grade” and “7th grade” staff in hiring new employees and hire only “7th grade” new employees, including high school grads and college grads. That means they will effectively hired into the same salary grade and will be eligible for promotions based on ability. Before the integration of the grades, the college grads were hired as the 5th grade staff while the high school grads were hired as the 7th grade staff.
With the integration of the grades, the bank was able to expand the number of the newly hired workers from 20 to 30 with the money saved from the cuts in the salary.
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