SEOUL (Yonhap) -- Unionized workers of SC First Bank, the South Korean unit of Standard Chartered Plc, launched an indefinite strike Monday in protest against the management's move to introduce a performance-based pay system.
"The labor union has kicked off an indefinite labor strike, and we will not budge until the management withdraws its move and the two sides reach a collective bargaining agreement," said Bae Kwang-jin, a spokesman at the bank's union.
Bae said about 2,900-3,000 unionized workers, more than 90 percent of the union members, were estimated to have gathered in Sokcho, 213 kilometers east of Seoul, to stage a rally. Out of 6,500 bank employees, about half are unionized workers.
SC First Bank is the first lender in South Korea seeking to introduce a performance-based pay system, causing vehement opposition from its labor union, which claims the new pay scheme is merely aimed at reducing labor costs.
On Friday, the bank said it would set up a performance management task force, as requested by the labor union, adding that its modified proposals include no forced labor restructuring and a 5 percent increase in the average base pay of union members.
But the labor union argued that the bank's proposal is not much different from offers made in the past.
SC First Bank claimed that the introduction of the performance-based pay scheme would help provide better services to customers by sparking competition in the fast-changing local banking sector.
Tension has risen since unionized workers at SC First Bank staged a one-day strike on May 30 in opposition to the bank's move to overhaul a seniority-based pay system.
SC First Bank said it will make efforts to minimize customers' inconveniences by sending all non-union workers and those who have opted not to go on strike to branches. But customers are likely to face inconveniences in tapping banking services if the labor strike prolongs.
Standard Chartered acquired Korea First Bank for 3.4 trillion won (US$3.1 billion) in April 2005, the largest-ever takeover by the British banking giant, and renamed it SC First Bank in September of that year.
Recently, market rumors that the British banking group may consider exiting the South Korean market have plagued SC First Bank.
But Peter Sands, chief executive officer of Standard Chartered, has said the group is completely committed to the Korean market, adding that planned closures of some of the bank's branches in Korea are part of the group's usual moves to reshape branch networks in all of its markets.