Labor unions across South Korea are rallying after Samsung Electronics Co. agreed to hand out bonuses of more than $400,000 to some employees. According to reports from Business Standard, this development has sparked a wave of demands for higher profit-linked payouts at major South Korean companies. Just this week, assembly-line workers at Hyundai Motor Co. staged a three-day partial strike as they seek up to 30% of consolidated profit to be set aside for bonuses. Unions at HD Hyundai Heavy Industries Co. and telecom operator LG Uplus Corp. want payouts equivalent to at least 30% of operating profit, while workers at Hanwha Aerospace Co. and HD Hyundai Electric Co. want to scrap bonus caps altogether. The movement represents a reminder of the risks investors face in a country that's historically had one of the most militant labour union presences in the region.
In the technology sector, thousands of employees at Kakao Corp., which operates South Korea's largest messaging service, went on strike for the first time last month, demanding that up to 15% of operating profit be allocated for bonuses. As reported by Business Standard, the union at Naver Corp., the country's top search engine provider, is forming a coalition with counterparts at multiple affiliates to strengthen their negotiating power. What began with workers calling for Samsung and SK Hynix Inc., the nation's two biggest chipmakers, to share banner profits from the artificial intelligence boom is spilling over to industries that have little to do with AI. The disputes may also lead to changes in how companies operate, with unions at Hyundai Motor and affiliate Kia Corp. asking for job guarantees against the future deployment of the Atlas humanoid robot.
The work stoppage at Hyundai could incur losses of more than ₹18.7 billion ($13 million) an hour, according to Yonhap News as reported by Business Standard. Separately, Samsung Securities Co. downgraded its price target for Kakao by nearly 27%, citing stalling restructuring efforts and tepid progress on its AI strategy. Analyst Donghwan Oh noted that "improving profitability through corporate restructuring was the most compelling investment catalyst for Kakao this year, but prolonged labour conflict risks weakening that momentum." The expanded union influence is already spelling financial challenges for some companies, with workers and unions arguing that bonuses typically reward senior managers and not employees facing the most uncertainty from AI disruptions and corporate restructuring.
Business groups have voiced concerns, saying a recent legal amendment expanding workers' rights has granted unions outsized influence and emboldened workers to threaten strikes. Opposition lawmakers are pushing for a revision to the law, including limits on the scope of collective bargaining and restricting disputes to working conditions. According to Business Standard, SK Group Chairman Chey Tae-won has signaled that SK Hynix may need to revise its bonus structure entirely if massive payouts negatively impact shareholders, suppliers or the broader industry. Without consensus on fair profit-sharing, experts warn there could be more frequent industrial action. As noted by economist Bumki Son at Barclays Bank Plc, "due to the rigid labour market, labour protections make it difficult for the businesses to fire employees, this almost makes latest compensation package agreements as a free option for the workers."
