Kakao is facing a potential strike as prolonged labor negotiations over bonuses and job security continue. The Kakao Union, part of the Korean Chemical Fiber and Food Industry Workers' Union, escalated pressure by approving a strike vote on May 20, while Kakao aims to reach a consensus during the mediation period.
According to the IT industry on May 21, a total of five Kakao entities, including Kakao Corp, Kakao Pay, Kakao Entertainment, DK Tech, and XL Games, held a rally on May 20 to support the strike vote, which passed in favor of a strike.
The two sides extended the mediation period after their first meeting on May 18, with the next session scheduled for May 27. If mediation fails, the union at Kakao Corp will gain the right to strike. Previously, four subsidiaries had sought mediation from the Gyeonggi Provincial Labor Relations Commission due to stalled wage negotiations, but mediation was halted during the first meeting, granting them strike rights.
The Kakao Union has been unable to reach an agreement on the compensation structure, including bonuses, during previous wage negotiations. Concerns about job security have also arisen amid ongoing restructuring within Kakao's subsidiaries.
During the rally on May 20, the union presented four key demands: 1) management reform and accountability, 2) job security and community safety nets, 3) fair performance compensation and profit distribution, and 4) the establishment of universal labor conditions and welfare systems.
The union believes that the difficulties in wage negotiations stem not only from the compensation system but also from job insecurity and a management-centered performance distribution structure. They plan to continue discussions on their collective demands separately from wage negotiations.
Industry sources indicate that the Kakao Union requested bonuses amounting to 13-15% of Kakao's operating profit last year. However, the union clarified on May 20 that their collective demands are separate from the wage negotiations and that they have not demanded bonuses based on operating profit.
There is a divergence in perspectives between the union and management regarding Kakao's performance improvement. The union argues that the efforts of employees during the restructuring and cost-efficiency measures have contributed to profitability, warranting discussions on profit distribution.
Conversely, Kakao is cautious about expanding compensation due to uncertainties surrounding AI investments. Recent analyses suggest that Kakao's profitability improvements are largely due to restructuring and cost adjustments rather than aggressive business expansion.
Kakao has been accelerating its restructuring efforts, including transferring shares and management rights of subsidiaries such as Kakao Games, Kakao Healthcare, and AXZ, the operator of the portal Daum. As a result, the number of Kakao's subsidiaries has decreased from 142 in September 2023 to approximately 93 currently.
The outcome of the upcoming mediation session on May 27 is expected to be a critical turning point for the potential strike. If a strike occurs, it could impact Kakao's ongoing services, including KakaoTalk, as well as its planned AI projects and schedules for the second half of the year.
Kakao is currently working on a project to integrate AI agents into its core messaging service, KakaoTalk, which encompasses conversation, search, recommendations, and payments. A strike could pose challenges for the advancement of these new business initiatives. The four subsidiaries outside of Kakao Corp are involved in finance and gaming sectors.
A Kakao representative stated, "Since both parties agreed to extend the mediation period on May 18, the company will continue to strive for a smooth agreement during the remaining time. We will also work to ensure that there are no disruptions to our ongoing services and project plans."
Meanwhile, the potential for Kakao's strike to influence labor relations in other IT companies is being closely watched. The IT Committee of the Korean Chemical Fiber and Food Industry Workers' Union, which includes companies like Naver, Nexon, and Neople, also participated in the rally on May 20. Given that Neople's union previously conducted a strike over bonus distribution issues, the ongoing labor disputes surrounding compensation structures in the IT industry may resurface.
* This article has been translated by AI.
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