As demands for performance bonuses linked to corporate profits spread across major manufacturing sectors, labor-management conflicts are becoming increasingly complex. Disputes over performance distribution among divisions have led to tensions not only between companies and labor unions but also among unions within the same company. Concerns are rising that expanding performance-based compensation could become a new source of conflict within the labor sector.
According to a report released on November 8 by the Korea Employers Federation (KEF), labor disputes totaled 88 cases as of the end of September this year, a decrease from 99 cases during the same period last year. However, the number of lost workdays increased by 45.2%, rising from 336,800 days to 489,190 days.
KEF identified the growing demand for 'N% performance bonuses,' which allocate a certain percentage of corporate profits to workers, as a key feature of this year's labor-management relations. This performance distribution model, highlighted by Samsung Electronics and SK Hynix, has spread to the automotive and shipbuilding industries. The Hyundai Motor union is demanding 30% of last year's net profit, while the HD Hyundai Heavy Industries union is seeking 30% of operating profit, and the HL Mando union is requesting 15% of operating profit as the basis for performance bonuses.
The issue lies in the potential for conflicts among members due to the performance-based compensation system, which varies by division. A notable example is Samsung Electronics, where labor disputes over performance bonus criteria have escalated into conflicts between the Device Solutions (DS) division, responsible for semiconductors, and the Device Experience (DX) division, which handles smartphones and home appliances. As the DS division's performance improved, the gap in performance bonuses widened, prompting DX employees to demand equitable compensation and participate in protests.
Recently, the establishment of a sixth labor union has introduced a new phase of conflict among unions. On November 4, the Ministry of Employment and Labor received a registration application for the 'Samsung Electronics Union Shop Labor Union.' This new union reportedly includes leaders from both the DS-focused super union and the DX-centered Donghaeng Union. Observers believe that internal conflicts within existing unions may have triggered the formation of this new union.
If this trend spreads to other manufacturing sectors, it could further increase uncertainty in labor-management relations. In industries where the production processes are closely interconnected, such as automotive and shipbuilding, the profitability and wage payment capabilities of individual companies vary. If demands for performance distribution at specific workplaces influence wage negotiations at other companies, disparities in compensation standards across different workplaces could emerge as a new issue.
KEF pointed out that conflicts at individual workplaces could also impact the production, sales, employment, and delivery schedules of partner companies. For instance, HL Mando has 292 partner companies in South Korea, employing approximately 40,000 people. If production at a key parts supplier halts, it could create burdens on wage negotiations across the entire industrial supply chain.
Lee Kwang-ho, a senior member of the Labor Relations Support Team, stated, "Labor and management need to establish reasonable negotiation practices that comprehensively consider not only the short-term performance of individual companies but also the volatility of the industry, global competition, the need for future investments, and the impact on partner companies."
* This article has been translated by AI.
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