Bonus debate spreads to Korea’s shipbuilders as unions demand slice of profit pie amid upturn

HD Hyundai Heavy Industries Ulsan Shipyard in Ulsan on Dec. 29, 2023 [REUTERS/YONHAP]

 

Korea’s shipbuilding industry is seeing mounting calls from employees for profit-sharing as the sector undergoes a surge in orders, mirroring labor movements at the country’s main chipmakers, SK hynix and Samsung Electronics.

 

After surviving years of layoffs, restructuring and wage freezes during the industry downturn, shipbuilding workers are increasingly demanding greater compensation from corporate operating profits generated by the current boom. 

 


 

Management at shipbuilding companies, however, is trying to pump the brakes on demands for larger bonus payouts, warning that the industry remains highly cyclical and that such payouts could undermine future investments.

 

HD Hyundai Heavy Industries laborers who joined the Korean Metal Workers’ Union demanded the company allocate at least 30 percent of its operating profit for employee compensation, according to shipbuilding insiders on Sunday. The proposal was among the key demands finalized during a meeting of unionized members held on Tuesday.

 

The union had previously projected that HD Hyundai Heavy Industries’ annual operating profit for this year would reach around 3.63 trillion won. Based on that estimate, at least 1.09 trillion won would be reserved for performance-based compensation under the union’s proposal.

 

Brokerage firms estimate the company paid about 418.2 billion won in bonuses to its 15,353 employees in permanent positions last year, equivalent to roughly 20.5 percent of its 2.04 trillion won operating profit. The union’s latest demand would raise that share by nearly 10 percentage points.

 

Union officials say workers’ contributions are especially crucial in shipbuilding.

 

“Shipbuilding performance is created through workers’ skills and labor,” said an official at a union affiliated with HD Hyundai Heavy Industries employees. “Workers endured wage freezes and stood by the company throughout the downturn, so now profits should be distributed fairly, including bonuses and broader improvements in employee welfare and benefits.”

 

Acting Administrator of the U.S. Maritime Administration Sang Yi speaks during the christening ceremony for the National Security Multi-Mission Vessel ″State of Maine″ at the Hanwha Philly Shipyard in Philadelphia, Pennsylvania, on August 26, 2025. [REUTERS/YONHAP]

 

Korea’s shipbuilding industry has only recently begun to recover from a severe downturn that began in 2016, which later led to mounting losses and voluntary retirement programs.

 

Although the industry has rebounded on booming demand for liquefied natural gas carriers and environmentally friendly vessels, it is simultaneously grappling with a shortage of skilled workers and rising labor costs.

 

“Shipbuilders may have little choice but to raise compensation to retain skilled workers and sustain productivity,” some analysts said.

 

The financial burden on companies appears substantial.

 

Shipbuilding is one of the world’s most cyclical industries, and firms are pouring resources into green technologies, autonomous navigation systems and factory automation — all of which intensifies the investment burden.

 

“Earnings have undoubtedly improved over the past several years, but shipbuilding profitability can fluctuate sharply depending on the market cycle,” an industry official told the JoongAng Ilbo on condition of anonymity. “There are concerns that structurally allocating a fixed share of operating profit could undermine companies’ ability to invest in the future.”

 

Labor unions at other major shipbuilders are also expected to bring performance-based pay to the forefront of this year’s wage negotiations.

 

Hanwha Ocean’s labor union, which received bonuses equivalent to 400 percent of base pay last year, is currently holding working-level discussions with management over revisions to bonus standards and compensation systems. The union has also included revisions to the bonus calculation system in its bargaining demands.

 

“[The demands] intend to help labor and management discuss details more transparently, such as what percentage of operating profit should go toward bonuses,” an official from Hanwha Ocean’s labor union said. “The goal is to establish a system that workers can clearly understand and trust.”

 

Hanwha Ocean’s shipyard in South Gyeongsang on March 12 [YONHAP]

 

Samsung Heavy Industries, which paid performance bonuses last year for the first time in 12 years after emerging from a lengthy slump, is also likely to face mounting pressure over compensation this year.

 

The head of the workers’ association at Samsung Heavy Industries said that demands for a fairer distribution of profits were raised during a town-hall meeting with President Lee Jae Myung and relevant ministers. 

 

“There are growing calls to distribute the profits and gains generated by the company to workers transparently and fairly, so I am under pressure,” the chief of the union at Samsung Heavy Industries told Lee and other government officials at the event.

 

In response, Labor Minister Kim Young-hoon acknowledged that “fairness of compensation is extremely important” and said he would “pay close attention to ensure that productivity gains are shared more broadly across the industry.”

 

Still, some industry officials warn that the debate over profit-sharing could trigger new tensions if discussions remain centered on regular employees at major shipyards and exclude subcontractors.

 

Disputes emerged last year over whether subcontracted workers should receive bonuses at the same rate as primary contractor employees, with labor and management clashing over what constituted equal compensation.

 

“As the debate over profit-sharing expands, one of the biggest unresolved questions is likely to be how to distribute gains to subcontracted workers as well,” another industry official said.

BY LEE SU-JEONG [[email protected]]