The ratio of employees in the financial industry to all employees hit an all-time low in the wake of the restructuring of the securities and life insurance sectors of last year and this year’s large-scale voluntary retirement in the banking sector.
According to Statistics Korea, the number of employees in the financial and insurance industries totaled 789,000 in the second quarter of this year, equivalent to 3.0 percent of total employees. The percentage is the lowest since records began in 2004.
The ratio had hit an all-time high of 3.6 percent in the first quarter of 2008 and moved between 3.3 and 3.5 percent in the following quarters. It decreased to 3.4 percent in the first quarter of 2014, 3.3 percent in the second, 3.2 percent in the third and fourth, and 3.1 percent in the first quarter of 2015. In the second quarter of this year, the number dropped by 58,000 from a year ago. In the meantime, the financial sector’s contribution to the GDP continued to decline from 6.6 to 5.6 percent between 2007 and last year.
This trend is attributable to the slow progress of labor market restructuring amid the current economic recession and the extension of the retirement age to be implemented soon. Besides, securities companies hired less and reduced the numbers of their employees and branches last year due to a decrease in profits, and life insurers followed them to deal with reverse margin. This year, banks are jumping on the bandwagon for similar reasons. The number of commercial bank branches in Korea dropped from 4,780 to 4,422 between 2008 and 2014, and KB Kookmin Bank, Shinhan Bank, and NH Nonghyup Bank have received voluntary retirement applications this year.
Experts point out existing employees’ high salaries as another reason. “The inflexibility of the wage system in the industry causes the companies to resort to personnel reduction when their business turns for the worse,” one of them explained.