Banks' 4.5-day workweek push puts jobs next on inclusive finance agenda

The financial sector's inclusive finance push, which focused on supporting low- to mid-credit borrowers this year, is expected to broaden its scope to job creation next year. The shift comes as calls from the political arena and labor groups to translate shorter working hours into new employment have grown more concrete, coinciding with the banking sector's drive toward a four-and-a-half-day workweek. With financial sector labor and management having launched follow-up talks on expanding youth intern hiring and securing funding for job support, individual banks are also weighing their own implementation plans.

According to financial industry sources Thursday, the Korea Financial Industry Union and the Korea Financial Industry Employers' Association are discussing follow-up measures to implement the industry-wide collective agreement signed last month. The talks are focused on finalizing the scale and operational structure of youth intern hiring — to be funded using the equivalent of 0.75 percent of total wages — as well as the method for contributing the equivalent of 0.25 percent of total wages to the Korea Financial Industry Public Foundation.

On youth intern hiring, the union is understood to be pursuing an approach in which each institution's management and local branch work out their own implementation plans suited to their circumstances, rather than having the union impose a single uniform model. The intent is to expand intern hiring in a way that reflects each institution's operational characteristics and staffing conditions.

Alongside this, labor and management are also discussing how to allocate contributions to the public foundation across institutions and how to carry them out. "We are in talks with the employers' association on the scale and format," a union official said. "Whether the contributions are actually made will also be reviewed jointly by labor and management next year."

Within the financial industry, observers say job creation and startup support could emerge as the central shared-growth agenda next year. As banks reduce working hours through the four-and-a-half-day workweek, social pressure is expected to grow for the sector to expand employment opportunities for young people and use financial support to back entrepreneurship and economic self-sufficiency. "If the big theme in inclusive finance this year was supporting low- to mid-credit borrowers, next year it looks like jobs will be the central agenda," an official at one financial holding company said.

The Korea Financial Industry Public Foundation is also understood to be preparing to expand its job-sector grant programs next year in line with the increase in available funding. The foundation runs annual programs — selected through open calls and other means — covering inclusive finance initiatives such as interest support for high-interest multiple debtors, job creation, education for children and youth, and local community development.

In the jobs category, the foundation currently supports unemployed young people undergoing debt restructuring, non-regular media workers, people with developmental disabilities, and youth in regional areas. The specific operational details of a youth startup support program to be funded through additional contributions will be worked out between the foundation and the union.

The ruling party is also watching closely whether the banking sector's four-and-a-half-day workweek push will translate into more jobs for young people. Jeon Hyun-hee, a Democratic Party of Korea lawmaker who heads the party's Labor Respect Practice Group, has held a youth entrepreneur roundtable and continued consultations with the financial sector and financial authorities since co-hosting a policy forum with the union in July.

In August, the lawmaker signed a policy agreement with the union to expand youth employment and startup support, and has since been pushing to broaden special guarantee programs for young entrepreneurs. The aim is to lower the financial barrier so that young people who lack collateral, credit history, or a technology track record can still secure startup funding at low interest rates if they have a viable idea and the drive to build a business. As banks have joined the effort one after another, the total financial support available for youth startups has grown by 600 billion won ($448 million) over the past two months.

In August, Hana Bank signed a special contribution agreement with the Korea Credit Guarantee Fund and Korea Technology Finance Corporation to supply 200 billion won in guarantees. That same month, Industrial Bank of Korea signed an agreement with the Korea Credit Guarantee Fund to provide 200 billion won in guaranteed loans to young startup companies. Last month, Woori Bank agreed to provide a total of 11.8 billion won in special contributions and guarantee fee support to the Korea Credit Guarantee Fund and Korea Technology Finance Corporation, backing the supply of 200 billion won in guarantees.

Banks, however, face no shortage of concerns. The agreement does not guarantee conversion to permanent employment or lock in a specific mechanism for linking internships to full-time hiring. Nor does a reduction in working hours automatically translate into an increase in new hires, meaning institutions must weigh workloads, staffing needs, and cost burdens at the same time. "Intern hiring is still distinct from new permanent employment, so the real question is how much it can actually expand job opportunities," an official at one bank said.