Union calls for profit-sharing spark concerns over eroding competitiveness

Home > Business > Industry

Union calls for profit-sharing spark concerns over eroding competitiveness

Published: 20 Apr. 2026, 13:06 Updated: 20 Apr. 2026, 20:55

Audio report: written by reporters, read by AI

A shipyard owned by HD Hyundai Heavy Industries [HD HYUNDAI HEAVY INDUSTRIES]

Calls from unions on companies to share profits are spreading beyond the semiconductor sector to other industries such as automakers, shipbuilders and defense firms, leading to concerns that such practices could undermine the competitiveness of key drivers of Korea's economy.

At SK hynix, labor and management agreed to allocate 10 percent of operating profit to bonuses and scrapped the previous cap, which had been set at 1,000 percent of base salary. With the company’s operating profit forecast at about 23 trillion won ($15.6 billion) this year, roughly 2.3 trillion won could be distributed as bonuses.

Now other unions are following suit. At Samsung Electronics, the union is calling for bonuses equivalent to 15 percent of operating profit, while the Hyundai Motor union is pushing for 30 percent of net profit.

Likewise, the automaker's union plans to demand that 30 percent of the company’s net profit be set aside for bonuses, according to industry sources who spoke to the JoongAng Ilbo on Sunday. The union is also demanding an 800 percent bonus payment and a shift from an hourly wage system to a monthly salary structure.

Hanwha Aerospace’s union, meanwhile, is preparing to call for the removal of caps on bonuses, an 11.14 percent increase in base pay and about 40 million won in cash-based incentive payments.

The passage of the so-called Yellow Envelope law — which allows workers to negotiate not only with their direct employer, but also their primary contractor — has also spurred calls for companies to pay compensation to subcontracted workers comparable to direct employees.

The headquarters of SK hynix in Icheon, Gyeonggi [YONHAP]

Such calls are especially mounting in the shipbuilding industry, which makes broad use of subcontracted workers. A subcontractor union at HD Hyundai Heavy Industries plans to demand that subcontracted and foreign workers receive the same level of pay and bonuses as regular employees.

Industry sources say, however, that such demands are excessive given business cycles and financial constraints and out of step with global practices.

Taiwan’s TSMC, the world’s largest chipmaker, has operated without unions since its establishment in 1987 and determines bonuses annually through its board, prioritizing investment in research and development and capital expenditure before allocating remaining funds to reward key talent.

At companies such as Nvidia and Micron, relatively few employees are covered by collective bargaining agreements, and across-the-board bonus hikes of the kind seen in Korea are rare.

Some also warn that tying bonuses directly to profit-sharing could erode shareholder value. For investors, large bonus payouts that take precedence over dividends or share buybacks may dilute expected returns.

“As bonus payouts grow, companies have fewer resources to invest in research and development and capital expenditures, which can weigh on future competitiveness,” a business source told the JoongAng Ilbo on condition of anonymity. “Once expectations rise, it becomes difficult to scale them back in a downturn, potentially harming both shareholders and the company’s long-term prospects.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY KO SUK-HYUN [[email protected]]