There are signs of a trend toward workforce downsizing in the securities industry again. As the securities business has slowed down from the third quarter of this year, an increasing number of securities companies are seeking to reduce the workforce through a voluntary retirement.
According to the Korea Financial Investment Association (KOFIA) on Dec. 9, the number of executives and employees from 56 securities firms stood at 36,220 as of September this year, up 1.5 percent, or 526, from 35,694 a year earlier. About half of the increase came from the merger between KB Investment & Securities Co. and former Hyundai Securities Co.
In fact, more than half of the securities companies downsized their workforce, except for some firms that have ramped up hiring including Korea Investment & Securities Co. with 106. In particular, Mirae Asset Daewoo Co. showed the highest drop in employment as the number of its employees decreased by 132 as of the third quarter.
The number of executives and employees in the securities industry has still continued to show a decline after the industry carried out a major restructuring at the time when the equity-linked securities (ELS) market delivered hefty losses between 2014 and 2015. The figure amounted to 40,241 as of 2013 but it fell sharply to 36,613 in 2014 due to the harsh wind of restructuring. It decreased by 3,628 in just one year. The number of executives and employees dropped to 36,161 in 2015 and rebounded to 38,432 in 2016 and then slipped to 35,889 last year.
As more and more securities companies are recently reducing their workforce again, the downsizing is expected to accelerate further this year. Starting with the biggest plunge in the stock market in the third quarter, the securities market has shown a slowdown, forcing the industry to tighten its belt. According to the Financial Supervisory Service (FSS), the combined net profit of 55 domestic securities firms came to 957.6 billion won (US$853.1 million) in the third quarter this year, down 23.1 percent from the previous quarter.
KB Investment & Securities is accepting the requests for voluntary retirement from its employees aged 43 and over until Dec. 12. This is the first voluntary retirement that the company is pushing ahead with after it merged with Hyundai Securities last year. The total number of executives and employees at KB Investment & Securities reaches 3,100.
Mirae Asset Daewoo is also said to be considering the downsizing of 4,600 workers as the company has pushed forward the abolition or combination of its branches. The labor union of Mirae Asset Daewoo issued a statement opposing the initiative last month.
However, some market experts say that it is inevitable that the securities industry will downsize the workforce. As the home trading system (HTS) and the mobile trading system (MTS) are becoming more common, there has been a steady decrease in the number of branches. With the number of customers visiting branches shrinking, the number of securities firms’ branches fell by 40.5 percent, or 755, over the past 10 years from 1,863 in 2008 to 1,108 in the third quarter of 2018
An official from the securities industry said, “The number of customers visiting branches is decreasing due to the revitalization of digital finance, such as the Internet and mobile, and there is uncertainty in the business environment next year. We can’t help but to merge our branches to improve the operation efficiency so we are also forced to reduce the workforce.”