Financial companies in South Korea will likely cut their workforces by up to 3,400 this year, industry data showed Sunday, pointing to harsh times that they are experiencing in the face of the prolonged economic slump.

Korean banks and foreign banks operating in the country will cut a combined 1,800 workers by the end of this year, while insurers will reduce their workforce by 600. Card and capital companies will also eliminate about 1,000 workers, according to the data.

The number of jobs to be eliminated this year will make up about 2 percent of 170,000 people employed in the financial sector.

It is still relatively smaller than about 5,000 people who were let go in 2010 and 2011, each.

The cut will be carried out mostly through voluntary retirement, under which employees leave their companies earlier than their retirement age in return for financial compensation, industry sources said.

Despite the job reduction of this scale, experts say that the total number of people working in the sector will not change much, as banks, insurers and credit card firms are expected to recruit new workers to fill the void.

This indicates a growing trend among financial companies to replace their high-salaried workers with fresh and low-salaried employees in a bid to lower their overall business costs. (Yonhap News)