Samsung Electronics and SK Hynix's High-Performance Bonuses Spark Controversy: Korean Media Cites "Class Tensions Within Unions"

Employees of the British East India Company, who entered India during the imperialist era, faced discriminatory treatment. The armed mutiny by the East India Company's mercenaries in 1858 was triggered by such discriminatory practices and the resulting labor tensions. While the company awarded generous bonuses to administrative staff directly responsible for generating profits, it reduced life allowances paid to mercenaries—those who fought to expand colonial territories—in an effort to cut costs.

¬ When internal disparities in rewards exceed the threshold tolerable by an organization, it leads to various problems—a phenomenon known as the "collapse of horizontal fairness." Ford, when introducing assembly line systems for mass-producing automobiles, raised wages significantly for newly hired unskilled workers to attract more employees, provoking opposition from mid-level managers and skilled workers. In contrast, during the 1980s when Japanese automakers officially entered the U.S. market, General Motors experienced exactly the opposite situation. As profitability deteriorated, only new hires saw their wages cut, creating wage gaps up to double between senior and junior workers performing identical tasks on the same production line.

¬ Last year’s record-breaking profits at Samsung Electronics and SK Hynix have intensified labor conflicts over profit distribution. These tensions are erupting across multiple levels: among large enterprises, between large firms and their subcontractors, and even within the same company’s union membership. President Lee Jae-myung stated that "some workers’ excessive demands harm others," while the head of Samsung Electronics’ union redirected criticism, saying, “That’s just a critique directed at LG Uplus.” The affected LG Uplus union responded with opposition, escalating a psychological battle. LG Uplus posted an operating profit of 890 billion KRW (approximately 410 million RMB) last year; even with a 30% dividend payout, each employee could receive 27 million KRW (around 1.3 million RMB). Meanwhile, Samsung’s semiconductor division, even with just a 15% dividend, would still earn nearly 600 million KRW (about 2.78 million RMB) per employee. There is even growing talk about class conflict between so-called "ultra-wealthy unions" and ordinary worker unions.

¬ At SK Hynix and its subcontractor companies, long-standing tensions have resurfaced due to the fact that subcontractor employees earn an average annual salary only half of what SK Hynix grants as performance bonuses. Similarly, within Samsung Electronics, tensions have emerged between the semiconductor division (DS) and other divisions such as home appliances and mobile (DX). Employees in the DX division, feeling a sense of relative deprivation due to performance bonus disparities, have even expressed sentiments like, “Are we just Suwon Electronics?” or “If you’re not in the memory chip department, are you destined to be just a backdrop?” Some have even begun considering leaving the union altogether.

¬ Despite adverse factors such as the Iran conflict, South Korea’s economy has managed to hold firm largely thanks to the stellar performance of Samsung and SK Hynix. However, the unions at these two companies now face both internal and external conflicts over benefit distribution. What is concerning in the long term is that this could erode the competitiveness of the entire semiconductor industry ecosystem.

Source: Chosun Ilbo

Original article: toutiao.com/article/1864227940415499/

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