By Oh Young-jin
Assistant managing editor
First, let’s talk about issues involving two foreign-owned Korean banks led by two bankers as mentioned in the headline before connecting them to try and draw a lesson or two.
For SC First Bank, the sixth-largest among Korean retail banks, which is setting a new record in terms of the period of a strike by its workers in Korea’s banking history, saving its CEO Richard Hill is saving the bank. Saving the bank is saving the union. The problem is that the two sides don’t see saving Hill as equal to saving the union.
Hill is open to negotiations, promising a committee of representatives from the union and management to work out details about his proposed performance-based salary system.
On June 7, just before the strike began, Hill visited a tent in front of the bank’s main office in downtown Seoul to meet union leader Kim Jae-yul. The Korea Times had a chance to talk to both of them prior to their meeting. Kim was skeptical about whether Hill would come and expressed his conviction about the management’s wicked scheme to destroy the union and deprive its members of workers’ rights.
Hill said that he would meet Kim but made sure that under no circumstances did he have any intention of backing down from his plan to introduce the new wage system.
Although it is hard to blame one party in a labor dispute and doing so can sometimes be counterproductive, the union in SC First’s case can’t escape criticism for three things.
By many indications available, it was the union which left the negotiating table and made it look greedy, considering SC First on average offers its employees better wages than other leading banks. Thirdly, their choice of Sokcho, the summer resort on the East Coast, as the site of their gathering, alienates them from the public, who often associate strikes with desperate action to defend their right to work, not skylarking on the beach.
Of course, left unexplained in this recap are the strike coming on the heels of a breakup in a year-long collective bargaining that started last year; SC workers’ big paycheck that is weighted toward executives and the “luxury strike” aimed at, inter alia, keeping members on their toes and preventing them from seizing the offices in an illegal action.
One who closely witnessed the 2004 strike by Hanmi Bank, the longest at 18 days before SC First’s ongoing strike, says that the workers took the building and disrupted the bank’s operations in protest against the takeover by Citigroup, making their strike illegal and subject to police action. Obviously, the SC First union has learned from it.
Despite the maturity it has gained in tactics, SC First’s union appears to be losing in strategy.
The union demanded that Hill come to Sokcho in an obvious attempt to humiliate the CEO and gain an upper hand in future negotiations. Hill went but his meeting with Kim produced little headway. The two met in Seoul and are expected to meet again today.
From the management, it has to show more leadership.
Above all, its new wage system would be the first in the banking sector so management should have expected opposition to come not just from its union but also from a broader labor sector as well. In other words, the SC union is bound to feel peer pressures from other bank unions, which are expected to render more than moral support, believing that when the SC First falls, they may be next.
Some bankers say they prefer to implement the merit-based remuneration system but can’t because of the unions’ opposition. “Equal treatment should be only selectively applied in terms of compensation,” a banker told The Korea Times.
Considering the complicated nature of labor politics, SC First should have either refrained from trying to introduce the system in the first place or gone on a stronger offensive. The stronger offensive is about a wholesale introduction of a performance-based wage system rather than the piecemeal approach it is taking.
This approach would make it more likely to turn the SC case into an issue of national interest, rekindling discussions about a new remuneration system. For this, SC needs better communication both within and with the outside and a strengthened chain of command but obviously it doesn’t, seeing that the SC strike is an issue that few take interest in.
Therein lies the wisdom (unwisdom) of this column. The reason that the SC strike is a nonissue is that it doesn’t disrupt the public’s daily lives seriously. As the strike drags on, more of its customers would carry out transactions at other banks, making the bank even less relevant. Already, a significant portion of deposits have been withdrawn with more likely for days to come unless a dramatic resolution brings an end to the strike.
When the bank’s vault is empty with its reputation in tatters, which side would claim this Pyrrhic victory as theirs, the union or management? That is why the union should treat Hill well because they are in it together.
Now how is Larry Klane, CEO of the Korea Exchange Bank (KEB), related to Hill?
A solution to the SC problem can be found in the KEB case where we will likely end up losing not just money but also face.
Lone Star, the Texas-based private equity fund, has been trying to sell its controlling stake in KEB for years but every imaginable spanner and wrench has been thrown into the works on its way out.
Korea will now likely pay twice as much as it would have if its early exit was allowed in the first place. Lone Star is still enjoying the upper hand in dictating terms to Hana Financial, the prospective buyer of KEB (We will know for sure, when we see whether Lone Star’s vow to file a constitutional petition is translated into action).
Korea’s reputation as an investment destination has been seriously compromised because of the unpredictability shown in dealing with Lone Star.
Klane is said to be unhappy about the unfair portrayal of Lone Star as corporate predator but has kept a low profile.
What brings Klane and Hill together is a question they pose to Korea: Can we make one mistake after another in handling foreign investors?
For KEB, our mistake was trying to block it from leaving Korea, when we had to let go of it.
For SC Korea, we are trying to chase it away, when we have to cajole it into staying. Hopefully, we will stop pushing and shoving before it’s too late.