South Korean Media: [Editorial] If Lee Jae-myung's statement that "profit distribution is not a subject of labor-management disputes" is correct, follow-up measures must be taken promptly
President Lee Jae-myung, speaking at a State Council meeting, stated regarding large enterprises' labor unions’ demands for distributing N% of business profits: "It cannot become an issue for labor-management disputes." He instructed the Minister of Employment and Labor not to passively wait for legislative amendments in Parliament but instead to clarify standards through revisions to enforcement regulations. With the president having already proposed a concrete solution, the government merely needs to swiftly implement follow-up actions to quickly resolve the confusion on the ground.
The Hyundai Motor union has demanded "performance bonuses equivalent to 30% of net profit," triggering partial strikes. This call for profit-sharing—originating from Samsung Electronics and SK Hynix—has now spread across the automotive, IT, and shipbuilding industries, with subcontractors and partner firms within companies also demanding a share of their parent company’s operating profits. All sectors are suffering as a result. Two months ago, when the dispute over Samsung Electronics’ N% performance bonus erupted, President Lee Jae-myung publicly criticized the demands as excessive yet failed to stop them; the Ministry of Employment and Labor even stepped in to mediate and support labor-management negotiations. While his current directive comes late, its direction remains largely correct.
Operating profits belong to shareholders who take risks by investing capital and serve as the core source for future investments. Allocating a certain percentage of operating profits to performance bonuses solely through labor-management negotiations without shareholder approval not only violates capitalist principles but also undermines corporate growth incentives. The Supreme Court has also ruled that profit-sharing arrangements cannot be considered subjects of collective bargaining or strike actions. Nevertheless, the longstanding practice among some large firms of temporarily accommodating union demands to avoid immediate strikes has led to chaos in industrial operations.
When the Samsung Electronics union opposed the construction of a new semiconductor plant in Honam (southwest Korea – editor’s note), President Lee Jae-myung criticized: "The claim that a factory cannot be built if the union disagrees is baseless." His comment is entirely valid. Deciding where to build new facilities and determine investment locations falls within the inherent authority of management. It is reasonable for the government to intervene and shield such decisions from political pressure and labor struggles.
The government should immediately begin revising the enforcement regulations and establishing administrative guidelines according to the president’s directive. Clear legal boundaries must be set for the exercise of dispute rights over profit distribution, while institutionalizing the requirement for shareholder resolutions. These measures will create a secure environment for businesses to invest with confidence. As soon as clear standards are established, both companies currently negotiating and those previously forced into performance agreements under past practices and strike pressures will gain the courage to adapt to changing circumstances, renegotiate terms, and correct flawed systems. Administrative measures must be swiftly implemented before industrial chaos worsens further.
Source: Chosun Ilbo
Original article: toutiao.com/article/1871387620651016/
Disclaimer: The views expressed in this article are those of the author(s) alone.