Korea’s Large Conglomerates Have Shared the Gains of Performance with Workers

“The disposal of Samsung Electronics’ excess profits falls within the company’s own managerial judgment, and resolution through labor-management autonomy must be the principle.”

The debate over performance bonuses at Samsung Electronics and SK hynix is heating up. Through labor-management agreement, SK hynix abolished the cap on excess profit-sharing bonuses and introduced a system that uses 10% of operating profit as the source of performance bonuses. Samsung Electronics’ union had also shown sharp differences over the principles governing the distribution of performance bonuses, but on the 21st, just before an all-out strike, the two sides reached a tentative agreement on wages and performance bonuses, avoiding an extreme confrontation. It is understandable that workers are raising concerns about the transparency and credibility of the standards used to calculate performance bonuses. However, it is far from the truth to frame the issue as if large corporations have been stingy in sharing the fruits of their achievements with workers.

The history of Korea’s large corporations is not simply a history of profit accumulation. It is also a history of channeling gains earned in global markets back into domestic employment, wages, bonuses, welfare, and improved working conditions. The high wages, stable employment, extensive welfare benefits, and performance bonus systems enjoyed by workers at large corporations today were not created overnight. They are the result of accumulated corporate growth and labor-management negotiations.

Samsung Electronics is a representative example. OPI and TAI are symbolic components of the performance compensation system at Korean companies, and OPI has been operated under a structure in which employees can receive up to 50% of their annual salary when a business division exceeds its targets. In addition to performance bonuses, Samsung Electronics has continuously expanded programs to improve employees’ quality of life, including on-site daycare centers, childcare support, and medical and living welfare benefits. This shows that compensation at large corporations has not been limited simply to wages, but has encompassed family life and household stability as well.

SK hynix is also a representative case of sharing performance gains. Amid favorable conditions in the semiconductor industry, labor and management agreed to use a fixed portion of operating profit as the source of performance bonuses, and also revised the system to abolish the existing PS cap. This shows that the company has not monopolized its gains, but has established institutional mechanisms to share excess performance with its members.

The history of labor-management negotiations at Hyundai Motor is no different. Hyundai Motor’s labor relations have long been treated as a symbol of conflict-ridden labor-management relations, but behind that lies a long accumulation of improvements in workers’ treatment. Through wage and collective bargaining agreements, Hyundai Motor has developed various compensation systems, including base pay increases, performance bonuses, encouragement payments, and stock grants. It also created an important turning point in reducing working hours and improving the work environment through the introduction of a continuous two-shift daytime system.

The cases of POSCO and LG Electronics are also noteworthy. POSCO expanded the implementation of a four-team, two-shift system to increase days off, ease the burden of night work, and improve rest conditions. LG Electronics introduced a post-retirement reemployment system, opening a path for skilled workers to continue working. Improving workers’ treatment is not reflected only on a pay scale. It also includes how people work, how much time they have to rest, and job security.

Of course, this does not mean that labor-management relations at all large corporations have been perfect. The insider-protection behavior of some militant unions, the lack of transparency in performance bonus calculation standards, disparities between regular and non-regular workers, and the dual structure of the primary and secondary labor markets remain issues that must still be addressed. But the existence of these issues does not mean that large corporations have neglected worker compensation and improvements in treatment. Rather, Korea’s large corporations have been the very actors that have most directly distributed gains earned in global markets to domestic workers.

The problem arises when the debate over performance bonuses moves in a direction that undermines corporate sustainability. The semiconductor, automobile, steel, and electronics industries are all exposed to massive capital investment and R&D requirements, global business cycle fluctuations, and competition for technological supremacy. If the method of distributing current operating profit at a fixed ratio becomes excessively rigid, the capacity for future investment may be weakened. Performance bonuses should be a sharing of performance, but they must not become an advance claim on future competitiveness.

More fundamentally, the disposal of excess profits falls within the realm of corporate property rights and managerial judgment. A company’s operating profit is not created solely by labor’s contribution; it is the combined result of shareholders’ risk-bearing, management’s strategic decision-making, large-scale capital investment, technological development, and market expansion. Therefore, decisions on how much excess profit should be distributed as compensation to executives and employees, and how much should be used for R&D, capital investment, financial soundness, shareholder returns, and preparation for future risks, are matters that management and the board of directors must fundamentally judge and take responsibility for.

This tentative agreement at Samsung Electronics is meaningful in that it avoided the extreme confrontation of an all-out strike and found a compromise through autonomous labor-management bargaining. However, if the trend toward officially fixing a certain proportion of operating profit as the source of performance bonuses spreads across industry as a whole, caution is needed because corporate authority over profit disposition and long-term investment decisions could come under pressure from labor-management bargaining. The transparency of performance bonus systems should be improved, but no precedent should be set in which a company’s authority to dispose of its excess profits is itself constrained by union demands or government mediation.

Government intervention should also be minimized. The history of performance-sharing at large corporations has, after all, been formed on the principle of labor-management autonomy. The primary actors in resolving labor-management conflicts are, to the end, labor and management themselves. Government coordination should remain in a supplementary role that facilitates dialogue, and strong intervention such as emergency adjustment authority should be used only as a last resort in cases where there is a clear and serious threat to the national economy.

What is needed now is not to pit companies and workers against each other by appealing to anti-business sentiment. Performance should be shared. But the survival and competitiveness of the companies that generate that performance must also be protected. Worker compensation is both the result of corporate growth and a condition for sustainable growth. However, the principles of compensation must be designed on the foundation of corporate property rights, managerial judgment, and the capacity for future investment. Without companies, there are no workers.

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Original title: 한국 대기업은 성과의 과실을 노동자와 나누어 왔다

Author: Gwang yong Go

Date: 2026-05-26

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&pn=1&idx=28969