By Park Hyong-ki



Commercial banks here are expected to face fierce opposition from an umbrella labor group representing more than 100,000 workers in the banking sector over banks unilaterally deciding to adopt a performance-based pay system.



Seven banks announced via the Korea Federation of Banks (KFB), Monday, that they have decided to use the new system allowing them to pay workers based on their annual performance, after holding their respective board meetings.



They have tried in vain to hold talks and narrow their differences with their unions, which the banks claimed refused to engage in negotiations several times. The seven banks are Shinhan, Woori, KB, KEB Hana, SC Cheil, Citibank and Nonghyup.



"Banks have decided on their own that it was necessary to rapidly adopt the performance-based system to boost productivity after they saw that it would be difficult to reach an agreement (with their unions) by the end of the year," the KFB said in a press statement.



It said that the country's financial regulators did not pressure the banks.



No further details as to when the banks will begin to adopt the system were announced.



However, some banks said that they will discuss the timeframe with their unions in the near future.



"We will further decide on the matter with the union," Woori Bank said in a statement.



The Korean Financial Industry Union (KFIU) criticized the banks, calling for the resignation of Yim Jong-yong, chairman of the Financial Services Commission (FSC). The labor group claimed that the FSC applied pressure on banks to hurriedly adopt the new pay system. The FSC denied the allegation.



"Chairman Yim clandestinely ordered the banks to illegally adopt the system without holding proper board meetings," KFIU President Kim Moon-ho told the press Tuesday.



He added that the banks must immediately nullify their decisions, which were made through "illegal procedures."



It remains to be seen whether bank unions will take legal action like the state-run Korea Development Bank, Export-Import Bank of Korea and Industrial Bank of Korea. The unions of those banks filed court injunctions in an effort to nullify their decision to adopt the new pay system.



Last May, FSC Chairman Yim urged the banking sector, especially the state-run banks, to install the system, and replace the old structure that incrementally increases annual salaries, as part of financial reform.



The chief regulator warned that financial companies that fail to launch the system in time will suffer disadvantages, and face consequences of budget and pay cuts.



"We will aggressively enforce measures to freeze wages and expenses (of employees) at organizations that postpone the adoption of the system," Yim said then.



