Korea - Bank employees may have to take a proposed 20% pay cut in order to retain their jobs during this economic crisis.

According to Korean newspaper JoongAng Daily, the Korea Federation of Banks, which represents the banks' and state-run financial institutions' management, are proposing up to 20% pay cuts for their employees to labour unions. This plan will allow them to retrench fewer workers and hire more fresh graduates. While it is still subjected to the labour unions' approval, both parties will be holding negotiations throughout this week.

"Once a consensus is made through the negotiation, each bank will map out its own pay cut plans," said one bank executive who declined to be named. "The plan has not been finalised yet, but the pay cut will likely be around 20%."

Earlier this year, the Korean government had campaigned for companies to create "job-sharing" as it argued that this would be the best way to avoid layoffs and unemployment during the downturn. It also recommended that companies lower existing workers' salaries and use the savings to retain employees or increase hiring quota instead.

Other banks which have already introduced entry-level positions' pay cuts by 20% include Woori Bank, Korea Export-Import Bank and Bank of Korea which has also slashed its top-tier executive pay by 5%.