Seoul: Union demands for profit-sharing bonuses are rapidly spreading beyond the semiconductor industry, following Samsung Electronics' agreement with its labor union on performance-based compensation. This development is raising concerns that the model of linking bonuses to a fixed percentage of profits could extend across various sectors of the economy.
According to Yonhap News Agency, unions representing five affiliates of Kakao have announced a partial strike, with performance bonuses as a key issue. They are demanding compensation equivalent to 13 to 14 percent of operating profit. Meanwhile, the Hyundai Motor union is seeking bonuses equal to 30 percent of net profit, and unions at Kia, HD Hyundai Heavy Industries, and LG U+ are demanding 30 percent of operating profit.
These demands are emerging from companies that are leaders in the IT, automotive, shipbuilding, and telecommunications sectors. If employers continue to concede to fixed-percentage profit-sharing bonuses under strike pressure, as Samsung Electronics did, such arrangements could become a standard practice across industries.
Alarmed by this trend, the Korea Enterprises Federation has advised member companies that percentage-based profit-sharing bonuses are not subject to collective bargaining. The federation argues that since such bonuses depend on business performance, they are not wages paid directly in exchange for labor and fall outside the scope of mandatory bargaining, creating potential legal concerns for strikes over these demands.
Shareholder groups have also expressed objections. The Korea Shareholder Activist Alliance held a news conference at the National Assembly, contending that allocating a fixed share of pretax operating profit to bonuses without shareholder approval is unlawful, and they warned of possible legal action.
Despite these concerns, profit-sharing has emerged as a major issue in this year's summer labor negotiations, extending even to industries facing deteriorating business conditions and restructuring discussions. At LG Chem, there have been arguments that dividends from subsidiary LG Energy Solution should be used for bonus payments.
Unions at suppliers to major corporations are also becoming more active, encouraged by the revised labor union law known as the Yellow Envelope Law, leading to increased uncertainty and workplace conflict. Critics argue that if this "bonus party for a privileged few" discourages investment and hiring while undermining the competitiveness of Korea's key industries, the broader public will ultimately bear the cost.
The government is urged to establish clear guidelines and set boundaries against excessive demands that risk damaging economic stability and industrial competitiveness.