Bankers' Salaries Soar as Most Koreans Struggle

  • By Kim Ji-seop

    August 18, 2023 12:03

    The average per-capita salary at Korea's four major commercial banks surpassed W60 million over the first six months of this year for the first time, even though the economy is in the doldrums (US$1=W1,337).
    Workers who accepted voluntary retirement packages received between W800 million to W900 million in severance pay and other compensation.
    KB Kookmin, Shinhan, Hana and Woori banks paid hefty bonuses and severance pay to their workers after reaping huge profits as interest rates soared. According to their semi-annual reports on Thursday, the average per-capita wage was W61.5 million, up 4.7 percent from a year ago and 22 percent from three years ago.
    Most banks award bonuses in the first half, so the annual pay is not twice as much, but since bonuses are usually 1.5 times a month's pay, the average annual salary at the major commercial banks is expected to surpass W100 million again this year. It first crossed the milestone in 2021.
    Banks achieved record earnings last year due to steep interest orate hikes. The total net profit of the four and NH Nonghyup rose 46 percent from 2020 to W12.69 trillion last year. Non-interest earnings such as commissions actually declined around W1 trillion, but interest income surged around W10 trillion.
    In December 2022 and January this year, 2,220 workers at the five major banks applied for voluntary retirement, and each pocketed W500 million to W600 million in severance pay. One industry source said, "It looked like more workers wanted to use this opportunity to leave."
    The top five highest earners among bank employees were those who chose voluntary retirement and were given W800 million to W900 million in severance pay.
    One Hana Bank staffer who accepted voluntary retirement received W1.13 billion, while the average severance pay at the five banks was W540 million. The money means even workers in their 30s now want voluntary retirement.
    Criticism has focused on the fact that banks grew in a protected market in Korea, which strictly barred new entrants, and were bailed out with taxpayers' money during the 1997 Asian financial crisis and 2008 global financial crisis.
    A 37-year-old employee of a start-up said, "I respect and envy salaried workers who get huge bonuses for developing innovative services or playing a major role in boosting sales. But I get despondent when I hear about retiring bankers receiving more than W1 billion in severance pay after working in a sheltered industry."
    Financial authorities have been telling banks to stop paying out so much, but there is no law to prevent it. One financial regulatory source said, "There's nothing we can do to stop the practice other than getting banks to report their expenditures, but we are looking into ways to address the public's concerns."
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