Citi in labor-management dispute over performance-based pay

By Kim Jae-won

Union members have been preventing Citibank Korea CEO Ha Yung-ku from entering his office as they continue to argue with management over promotion opportunities, work conditions and performance-based pay.

Nine union leaders have been occupying Ha’s office since Monday, Citi sources say, and have questioned why nobody was promoted to executive-level in the company’s annual personnel reshuffle last week. They also believe management is seeking to expand performance-based compensation without their consent, although the company has firmly denied this.

Citi’s personnel system divides employees into five levels based on hierarchy and compensation levels, with a first-year workers starting at level five, company officials say. From branch manager positions and up, employees could be categorized anywhere from the third to first levels based on authority and responsibility.

According to the Citi union, no employee was promoted to level I in the recent personnel changes, unlike the five to 10 employees promoted to that level in previous years. Promotions from the third to second levels were also reduced, they said.

``We can’t understand what’s going on. The bank earned 450 billion won ($396 million) in net profit last year, up more than 100 billion won from 2010. There is no reason for the company to cut back on promotions,’’ said Park Seong-mo, a spokesman of Citi’s trade union.

``It’s regrettable that the company treats employees this way when it paid out dividends of more than 130 billion won to shareholders recently.’’

Management officials at Citi simply say the company has no need to expand its number of executive-level officials when they already account for a higher proportion of its workforce than the levels at other banks.

``Making personnel decisions belongs to the realm of the CEO and the trade union has no business to interfere in the way this is done,’’ said a company official.

The company also said it has no plans to expand merit-based pay unless the union agrees to it.

Citi unionists occupying the office of its CEO confirm that banking is one of the few industries in Korea where labor militancy is alive and well.

Korean banking employees often use collective action to get what they want. About 3,000 employees of Standard Chartered Bank in Korea staged a two-month strike last summer to oppose a performance-based wage system. The management and the union are still having talks on the matter.

Unionized workers of Korea Exchange Bank (KEB) also flexed their muscles last month in negotiations with Hana Financial Group, its new major shareholder. Hana agreed with KEB to guarantee independent management for five years to calm down the unionists, who had opposed the acquisition for fear of wage cuts and “discrimination.”