Banking sector pushes voluntary retirement for ‘younger’ workers

An employee of a major bank here works at a sales office in Seoul, in this file photo on Nov. 30. Yonhap

By Lee Min-hyung

Voluntary retirement has long held a negative connotation in Korean society, as it is typically used in situations involving middle-aged and older employees who do not want to leave a company, but are effectively forced out.

But the perception is gradually changing as companies ― particularly in the financial circle ― encourage younger staff to apply for early retirement by offering incentives, as part of measures to cut fixed personnel costs in times of uncertainty as witnessed with the outbreak of the COVID-19 pandemic.

The banking industry is one of the most frequently-mentioned in its push for the voluntary retirement of employees in the wake of the coronavirus outbreak last year.

With the outbreak intensifying the need for digital services, major banking groups have accelerated building non-face-to-face transaction systems over the past year. The digital boom, however, has reduced banks’ demand for conventional clerks or office workers, as mobile banking systems rapidly replace the work previously done by people.

Hana Bank is pushing a voluntary retirement system targeting those aged over 40 and who have worked at the lender for more than 15 years. NongHyup Bank has also sought applications for early retirement from those over the age of 40 for the past three consecutive years.

The same scenario is playing out in non-banking financial businesses. Talks are underway between KB Insurance’s management and union over voluntary retirement for employees over the age of 40. If both sides reach an agreement, this will mark the first time that the company has widened the age band for early retirement to the early 40s.

“Fewer and fewer people want to work hard at a company for all of their lives, so banks and financial firms are on track to reduce the age band for voluntary retirement programs,” a financial industry source said.

“The financial circle’s incentive packages for early retirement are attractive enough for younger employees to consider leaving the company and starting a new life by finding a job at a fintech company with a less rigid corporate culture.”

NongHyup accepted early retirement for those born between 1971 and 1980 by offering a special severance pay package equal to 20 months of their average monthly salary, during a year-end voluntary retirement program in 2020.