SK Hynix's tentative agreement for the 2026 wage and collective bargaining negotiations is set to face a decisive test among union members. A key point of contention is the method of performance bonus distribution, with management proposing a 'stock-linked' compensation plan that clashes with the union's strong preference for cash.
According to industry sources, the production workers' union at SK Hynix in Icheon and Cheongju will conduct a two-day vote starting August 24 on the tentative agreement for the 2026 negotiations. The technical staff union is also expected to complete its voting this week and announce the results.
The core of the agreement involves a complete overhaul of the profit-sharing structure. The parties have agreed to distribute 40% of the performance bonus linked to operating profit in cash, with the remaining 60% in company stock. Of the stock, 40% can be sold in the current year, while 20% will be paid out over two years in a deferred payment scheme.
Management has characterized this structure as an advanced approach to aligning corporate value with employee compensation, particularly in light of increased profits from the AI semiconductor boom. The fact that the two sides reached this agreement without strikes or external mediation is also seen as a positive development.
However, union members have reacted with skepticism. Many are unhappy that the promise to maintain 80% cash distribution of the performance bonus for ten years was overturned in just one year. This sentiment is particularly strong among younger employees who prefer cash. One member expressed frustration in an anonymous chat, stating, "If they break a promise made just a year ago, how can we trust the company moving forward?" The newly formed 'Unified Union Task Force' is also preparing a response to the tentative agreement, indicating that the division over member sentiment is intensifying.
In response to member backlash and concerns over stock price fluctuations, the agreement includes a buffer mechanism. For the first year of the new system, members will have the option to receive cash for the 40% of stock designated for sale. This could raise the actual cash portion to as much as 80%.
Additionally, a safeguard has been included that applies the lowest closing price among the tentative performance announcement date, cash payment date, and stock payment date when calculating stock value. The basic salary increase rate has been set at 6.3%, slightly surpassing Samsung Electronics' increase of 6.2% this year. Employee welfare points will also rise from 2.4 million won to 3.6 million won, and the eligibility for housing loan support will be expanded to include all married employees, not just those with multiple children, increasing the loan limit from 200 million won.
Since the production and technical staff unions have been negotiating separately with management, each union will conduct its own vote. The agreement will only be finalized if both unions meet the conditions of a majority attendance and majority approval from those present. If either union fails to secure a majority, it will have to start negotiations from scratch with management.
SK Hynix has faced rejections in union votes for tentative agreements in 2023 and 2024, leading to renegotiations with management. Notably, in 2024, after negotiations began at the end of June, a vote in September resulted in a rejection, and it took seven rounds of renegotiation before a final agreement was reached four months later.
Industry observers note, "The differing perspectives between labor and management over profit distribution have emerged amid a boom in AI memory, generating tens of trillions of won in annual profits. The outcome of this vote will be a significant milestone in the restructuring of performance compensation systems among semiconductor companies."
* This article has been translated by AI.
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