More than half of the re-employed former employees of the Financial Supervisory Service (FSS) moved to private financial companies last year. Although they passed the employment screening of the government, the ongoing controversy over 'privileges for former officials' arises from the fact that former officials of the financial authorities occupy key positions in supervisory agencies. There are concerns within and outside the FSS that the increase in the financial migration of FSS employees may worsen due to the wage peak system and accelerated replacement of department heads.
According to the Public Officials Ethics Committee on the 7th, the number of FSS employees who passed employment screening last year was counted at 43. The majority of re-employed former employees of the FSS chose to work at private financial companies. A total of 25 former FSS employees found new jobs in various financial institutions, ranging from top-tier financial groups like JB Financial Group and Shinhyup Bank to lending firms and corporate insurance agencies (GA). Seven individuals were employed in financial associations and related non-profit organizations, and seven more found jobs at law firms. Four individuals were hired by corporations.
Employees at the FSS at level 4 and above are subject to employment restrictions for three years after retirement. However, if there is no close relation between the work handled in the previous five years before retirement and the work they wish to pursue, they can receive employment approval after undergoing a review by the Public Officials Ethics Committee.
Every year, dozens of former FSS employees are re-employed in financial companies, leading to ongoing discussions about the 'favoring of former officials.' Most former FSS employees take on responsibilities such as audits within the financial companies, utilizing their experience in internal control and regulatory compliance. However, since these employees are also used as communication channels with the financial authorities, it is argued that financial companies hire former FSS employees to exert influence. For example, Kakao Bank appointed a retired level 3 FSS employee as the head of the External Cooperation Division in December last year. The External Cooperation Division is responsible for handling tasks related to the National Assembly and the financial authorities.
Concerns have been raised about whether proper management and supervision of financial companies is possible given the re-employment of FSS employees in supervisory agencies. There are worries that the phenomenon of re-employment after retirement is not the only issue to consider, as former FSS employees may form collusive relationships while performing audit tasks with an eye toward high-paying re-employment even during their tenure at the FSS.
Moreover, there are projections that the introduction of the wage peak system and the acceleration of the generational change among department heads will encourage employees’ migration to the private sector. In the case of FSS employees, department heads enter the wage peak system four years before retirement, while team leaders and below enter three years before seniority. During this period, reported salaries can be cut by up to half, and as salaries decrease, the temptation to move to the private sector also increases.
Furthermore, following the appointment of FSS Governor Lee Bok-hyun, the turnover rate for department heads has accelerated, resulting in a significant increase in the number of employees without positions after leaving their department head roles. In the past, it was common for department heads to retain their positions for nearly five years and leave their roles a year before entering the wage peak system. However, under this governor, it has become more common for department heads to step down from their positions within two to three years. With more individuals stepping down earlier than before and most encountering salary cuts, the likelihood of their migration to the private sector has increased.
An individual associated with the financial sector who is a former FSS employee said, 'Currently, senior FSS employees face instability due to frequent changes in department heads and significant salary cuts due to the wage peak system.' They noted, 'These factors lead them to consider employment in financial companies.' They added, 'It is necessary to improve the organizational culture to retain employees until retirement and to change the personnel management structure, such as shortening the wage peak period.'