The performance-based bonus system that SK Hynix labor and management agreed to maintain for 10 years last year has been brought back to the negotiation table after just one year.
This year's wage and collective bargaining agreements were initially expected to focus on wage hikes and expanded welfare benefits. However, the issue of performance-based bonuses has resurfaced in the spotlight as the company reportedly recently proposed a new bonus plan.
Attention is now focused on whether labor and management can narrow their differences regarding the bonus system through the intensive negotiations held on the 21st.
According to industry sources, the union representing SK Hynix production workers held intensive working-level negotiations with management yesterday morning at the Jincheon Chamber of Commerce and Industry building in North Chungcheong Province.
The salaried workers union also engaged in negotiations on the afternoon of the same day.
These intensive negotiations were arranged after labor and management failed to narrow their gaps on major agenda items, including performance bonuses, during the third plenary bargaining session held on the 14th.
At the time, management stated, "To find an overall common ground and reach a concrete conclusion, we decided to accept the intensive negotiations proposed by the union," adding, "We expect reasonable alternatives to be derived through active expression of opinions between labor and management."
In the process of plenary negotiations that began early this month, management reportedly proposed a new agenda concerning performance bonuses.
While specific details have not been made public, it is known that measures such as mandating the payment of a portion of performance bonuses in company shares were discussed.
In response, the production workers union protested during the third plenary session, stating, "The bonus proposal presented by the company is at a level that undermines the intent and basic direction of the agreement painstakingly forged last year, and we cannot accept it."
The salaried workers union similarly stated, "If there are any parts where the standards for performance bonuses are changed or losses occur, we will absolute not accept them."
Previously, SK Hynix labor and management agreed in last year's negotiations to abolish the cap on the Profit-Sharing (PS) bonus, which is funded by 10 percent of operating profit, and to maintain this system for 10 years.
The core of the agreement is that 80 percent of the PS payout is disbursed in cash for the current year, while the remaining 20 percent (10 percent each year) is deferred and paid out over two years.
In addition, SK Hynix operates a shareholder participation program where employees can voluntarily choose to take up to 50 percent of their PS in company stock and receive an additional 15 percent cash payout on the purchase amount if they hold the shares for one year. The company has also introduced a system allowing PS to be accumulated into a defined contribution (DC) retirement pension plan.
If this performance bonus system is maintained, SK Hynix's operating profit this year is expected to reach 270 trillion won, which would significantly increase the pool of funds available for PS.
A simple calculation of 10 percent of operating profit divided by the total number of employees (approximately 35,000) estimates an average of about 700 million to 800 million won (pre-tax) per person.
Actual payouts will vary depending on job rank and individual criteria.
As concerns grow among employees over the possibility of changes to the bonus payment method at a time when the scale of this year's bonuses is projected to surge, anxiety is mounting.
Some analyze that employees have become even more sensitive to the bonus system as this coincides with recent discussions in political circles regarding excess profit-sharing schemes for the semiconductor industry.
Reactions continue to pour out on the internal bulletin board and anonymous communities, such as "Why are we renegotiating an agreement that was supposed to be maintained for 10 years?", "Are performance bonuses going to be reduced?", and "We must protect the existing agreement."
In addition, complaints persist over the union's insufficient sharing of the progress of these negotiations.
Industry watchers interpret that external public opinion surrounding SK Hynix's bonuses, the burden of cash outflows from booming performance, and the initiative to tie employee compensation to long-term corporate value have all influenced the company's review of new performance bonus payout methods.
SK Hynix operates a multi-union system, with the technical and salaried workers union affiliated with the Korean Confederation of Trade Unions (KCTU) and the production workers union affiliated with the Federation of Korean Trade Unions (FKTU) conducting wage and collective bargaining negotiations separately.
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