By Kang Seung-woo
SC First Bank’s labor strike was extended to 19 days Friday, making it the longest running collective action in the banking sector’s history.
With no compromise in sight, customers have rushed to make withdrawals to the tune of about 1 trillion won ($946 million) during the period.
This accounts for just 2 percent of total deposits amounting to 46 trillion won. The figure, however, indicates only the tip of a great deal of loss of confidence among customers that had already been serious even before the strike began.
Observers say that the record strike will weaken the bank’s sales capacity.
“SC First has faced a declining market share and net earnings and the prolonged strike will further erode its competitiveness,” said a Seoul-based analyst.
The bigger issue is the two sides appear to be waiting for the other to succumb first.
“We do not have a problem at all in dealing with withdrawals,” said Park Chong-hoon, senior vice president at SC First Bank. “SC First is well prepared for the 1 or 2 percent withdrawal from the total deposits or even more. Park’s strong tone and readiness to go the distance apparently reflects management’s determination not to take a step back.
“Despite being restrained from propelling into new businesses, we are all right in dealing with current clients.”
He said that the lender’s working group is still in negotiation with the union, but there is no immediate plan for its CEO to meet with the union as demanded.
The union feels frustrated, but returning to work is not among its options yet.
“Employees on strike are more worried about the withdrawal than management,” said Bae Kwang-jin, a spokesman at the bank’s union.
“Management has given up its status as a lender, as it has made up for our absence with those who have nothing to do with the banking industry,” one union official said.
Currently, the union has continued a rally, staying in a resort in Sokcho, Gangwon Province, 213 kilometers east of Seoul, which drew criticism from the media and the public for its “luxurious strike.”
Unionized workers at SC First started an indefinite strike in protest against management’s move to introduce a performance-based pay system on June 27.
SC First Bank, headed by CEO Richard Hill, is the first lender in the country seeking to introduce a performance-based pay system, causing huge opposition from its labor union, which claims the new pay scheme is merely aimed at reducing labor costs.
Midway through the on-going strike, the bank temporarily shut down operations at 43 branches in its efforts to reduce damage from the walk-out by union employees. SC First has 392 branches across the nation.
Union members account for more than half of the bank’s 6,500 employees, according to the labor union. SC First is still operating automated teller machines and Internet and mobile banking services.
The strike marked the most serious industrial action in the banking industry since a strike at the now-defunct Hanmi Bank in 2004.
The union of Hanmi staged a strike for 18 days to demand job security after the bank had been acquired by Citigroup.
SC First was created after Standard Chartered paid $3.3 billion for full ownership of Korea First Bank in 2005 and is the sixth-largest lender among the nation’s seven commercial banks.