South Korea’s SK Hynix labor and management saw their tentative 2026 wage and collective bargaining agreement\u2014reached after more than two months of negotiations\u2014rejected by union members in a ratification vote by a margin of just 25 votes. The plan to pay 60% of performance bonuses in Treasury Shares failed to clear the union threshold, sending negotiations back to square one.<\/p>\n
According to the SK Hynix union on the 25th, the ratification vote for the production workers’ union tentative agreement, which closed at 9 a.m. that day, tallied 7,535 votes against (50.08%) and 7,510 votes in favor (49.92%). Of the total 16,083 union members, 15,045 participated, for a turnout rate of 93.81%. The gap between opposing and supporting votes was a mere 25, underscoring how sharply divided membership opinion was.<\/p>\n
The core of the rejected tentative agreement was a 6.3% wage increase combined with payment of 40% of the Excess Profit Distribution (PS) in cash and the remaining 60% in Treasury Shares. Of the 60% paid in stock, 40% would have been delivered immediately and sellable from the day after receipt, while the remaining 20% would be distributed in 10% installments one year and two years later. Notably, for the 2026 PS to be paid early next year, employees would have been able to convert 40%\u2014two-thirds of the current-year stock allocation\u2014into cash, meaning that depending on individual choice, up to 80% of the total PS could have been received in cash.<\/p>\n
Management also built in safeguards against share price declines. When calculating the number of shares to be granted, the lowest closing price among the annual preliminary earnings disclosure date, the PS cash payment date, and the stock grant date would be applied. If the share price fell immediately after the stock grant and failed to meet the promised compensation amount, the shortfall would be made up in cash.<\/p>\n
Nevertheless, more than half of union members voted against the deal, driven decisively by dissatisfaction that last year’s labor-management agreement\u2014to pay 10% of operating profit in cash for 10 years\u2014was altered after just one year. Within the union, sentiment prevailed that the original cash payment commitment should be maintained rather than substituting volatile stock.<\/p>\n
Securities analysts project SK Hynix’s operating profit this year at \u20a9250 trillion (approximately $181.2 billion). Based on the labor-management agreement to allocate 10% of operating profit to PS funding, a simple calculation suggests the average per-employee PS would reach approximately \u20a9700 million (approximately $510,000) before tax. Of this, roughly \u20a9420 million (approximately $300,000) was slated to be paid in Treasury Shares.<\/p>\n
Unlike the production workers’ union, the technical and office workers’ union passed the tentative agreement in its ratification vote, which closed that afternoon, with a 66% approval rate. However, with membership of only around 1,000\u2014far smaller than the production union\u2014and separate negotiations underway, observers note that the office union’s vote result will have limited influence on renegotiations with the production union.<\/p>\n
With this rejection, SK Hynix labor and management must return to the bargaining table. The biggest issue in renegotiation is expected to be how much to increase the cash payment ratio. Some hardline union members are demanding the entire bonus be paid in cash, so if management insists on maintaining the existing stock payment ratio, prolonged negotiations cannot be ruled out.<\/p>\n
Market analysts expect that while management is unlikely to fully withdraw the stock payment plan, it will likely seek a compromise by adjusting the cash-to-stock ratio or providing additional share price protection mechanisms for the stock-paid portion.<\/p>\n
The SK Hynix bonus dispute is notable as the epicenter of the “N% performance bonus” demand spreading across South Korean industry. After SK Hynix agreed last year to allocate 10% of operating profit to bonus funding and remove payment caps for a 10-year period, unions at other major corporations began making similar profit-sharing demands.<\/p>\n
Samsung Electronics, after labor-management conflict this year, established a Special Management Performance Bonus in its semiconductor (DS) division funded by 10.5% of business performance. The special bonus has no cap on payout ratio and is paid entirely in Treasury Shares after tax, but only one-third can be sold immediately, with the remainder subject to one-year and two-year selling restrictions. The existing Excess Profit Incentive (OPI) was also changed to base its funding on business performance rather than Economic Value Added (EVA), bringing the combined funding for the special bonus and OPI to 11.5\u201312% of business performance.<\/p>\n
The automotive industry is no exception. Hyundai Motor’s union demanded a base salary increase of \u20a9149,600 (approximately $110) along with performance bonuses equal to 30% of the previous year’s net profit, and on the 21st staged its first full eight-hour strike in 10 years, since 2016. Labor and management resumed negotiations at the Ulsan plant on the 24th and reached a tentative agreement on the 25th. The agreement includes a base salary increase of \u20a9100,000 (approximately $72), a management performance bonus of 400% plus \u20a912.7 million (approximately $9,200), and 15 shares of stock. The union plans to hold a ratification vote on the 31st. Kia’s union is similarly demanding a base salary increase of \u20a9149,600 (approximately $110) and performance bonuses equal to 30% of the previous year’s operating profit.<\/p>\n
In the steel industry, POSCO’s union secured the right to strike on the 18th after the National Labor Relations Commission issued a mediation suspension decision, and has begun preparing for a partial strike. If an actual strike occurs, it would be the first in the company’s 58-year history since its founding in 1968. The POSCO union is demanding a 7.1% base salary increase, a 600% incentive payment, and 50 shares of employee stock. HD Hyundai Heavy Industries’ union is also demanding profit sharing of at least 30% of operating profit and is conducting a strike authorization vote from the 25th to the 27th.<\/p>\n
As bonus formulas proliferate, what constitutes “performance” has emerged as a new point of contention. Samsung Electronics and SK Hynix base their funding on operating profit, while Hyundai Motor’s union uses net profit and Kia’s union uses operating profit. Operating profit reflects earnings from core business operations, while net profit incorporates financial gains and losses and taxes, meaning payment amounts can vary depending on the chosen metric.<\/p>\n
Stock-based compensation is also becoming more prevalent in bonus payment structures. Following Samsung Electronics’ decision to pay the DS Special Management Performance Bonus entirely in Treasury Shares, SK Hynix also drafted a tentative agreement to pay 60% of PS in company stock. Hyundai Motor and Kia have also included 15 and 45 shares of Treasury Shares, respectively, in their compensation proposals during negotiations.<\/p>\n
Business conditions vary considerably by sector. SK Hynix, riding the AI semiconductor boom, is posting record results, while the automotive industry faces tariff burdens and slowing demand, and the steel industry is experiencing a prolonged downturn. Despite divergent industry conditions, the demand to expand performance-linked compensation is spreading across the board.<\/p>\n
Labor-management conflict is also spreading throughout the broader semiconductor ecosystem. Hanamaterials, which produces silicon for semiconductors, saw a union established in May followed by strikes and a lockout in an escalating standoff. Leeno Industrial, the largest company by market capitalization in Busan, has seen its first-ever strike\u2014which began on the 23rd of last month\u2014extend beyond one month. Management has disclosed strike-related losses of \u20a92 billion (approximately $1.4 million) per day, with the cumulative total now exceeding \u20a960 billion (approximately $43.5 million). Semes, a Samsung Electronics subsidiary that manufactures equipment, also established a union in July and has been growing its membership.<\/p>\n
Concerns have been raised that if bonus formulas are locked into collective bargaining agreements for extended periods, cost structures could become difficult to adjust when business conditions deteriorate. Unions, by contrast, argue that clearly defined formulas are necessary to ensure workers receive a fair share of profits during boom periods.<\/p>\n
A business community source said, “In the past, the core issue was how much to raise wages; now, the center of labor-management negotiations has shifted to what criteria will be used to distribute company profits. Conflicts over profit-sharing principles are likely to recur at major workplaces going forward.”<\/p>\n","protected":false},"excerpt":{"rendered":"South Korea’s SK Hynix labor and management saw their tentative 2026 wage and collective bargaining agreement\u2014reached after more…\n","protected":false},"author":2,"featured_media":132076,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[40203,702,800,613,3532,442,276,1136,241,275,10739],"class_list":["post-132075","post","type-post","status-publish","format-standard","has-post-thumbnail","category-sk-hynix","tag-excess-profit-distribution","tag-hyundai-motor","tag-labor-union","tag-operating-profit","tag-performance-bonus","tag-posco","tag-samsung-electronics","tag-semiconductors","tag-sk","tag-sk-hynix","tag-treasury-shares"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts\/132075","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/comments?post=132075"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts\/132075\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/media\/132076"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/media?parent=132075"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/categories?post=132075"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/tags?post=132075"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}