Once the Highest Average Salary at SK Energy, 30 Million KRW Decrease in 2 Years

Last Year Employee Average Salary 121 Million KRW
Trillion-Won Deficit Last Year Due to Low Oil Prices and Poor Market Conditions
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SK Energy Petroleum Product Shipping Yard

[Asia Economy Reporter Choi Dae-yeol] The average annual salary of employees at SK Energy, the nation's top oil refining company, decreased by more than 10 million KRW compared to the previous year. This is attributed to the sluggish industry conditions. Despite being one of the highest-paying companies within the SK Group, SK Energy's average salary has now become comparable to that of SK Telecom.

According to SK Energy's business report released on the 19th, the average salary of all employees excluding registered executives was 121 million KRW last year. Considering that the average salary in 2019 was 132 million KRW, it decreased by about 11 million KRW. Two years earlier, in 2018, the average salary was 152 million KRW, marking a drop of over 30 million KRW in two years. The average salary is calculated by dividing the total salary expenditure by the average number of employees during the year, based on income before the deduction of earned income tax credits as reported in the wage and salary payment statement.

The oil refining industry has traditionally been known for high salaries due to massive margins and stable supply chains. According to data surveyed by a platform operator early last year, it ranked first in average annual salary excluding the financial sector. However, prolonged low oil prices combined with demand slumps caused by COVID-19 last year led to losses amounting to trillions of KRW in a single quarter. SK Energy's annual loss last year reached 1.9631 trillion KRW. The company recorded an operating profit of 1.5 trillion KRW (consolidated basis) in 2016. This dropped to the low 800 billion KRW range in 2018 and further halved to around 360 billion KRW in 2019.

Compared to other affiliates within the group, SK Energy's salary level has become similar or even lower. SK Telecom's average salary last year was 121 million KRW, up 5 million KRW from the previous year, making it comparable to SK Energy. In terms of employee tenure, SK Telecom's average of 12 years is about half that of SK Energy's 21 years. SK Hynix, which has not yet released its business report, had an average salary of approximately 117.5 million KRW in 2019. Considering improved company performance due to favorable industry conditions, it is possible that SK Hynix's average salary will surpass SK Energy's this year.

Since there are no signs of a short-term recovery in the oil refining industry, it seems unlikely that employee salary levels will rebound soon. At SK Hynix, conflicts arose between employees and management over performance bonus distribution standards, and the company did not provide performance bonuses last year due to large-scale losses. It is highly likely that the average salary level for employees, to be announced early next year, will decline further. Performance bonuses are included when calculating average salaries.

President Cho Kyung-mok, who serves as CEO, saw his salary increase, but his performance bonus decreased by more than 200 million KRW compared to the previous year, resulting in total compensation of 1.217 billion KRW last year. The performance bonus was based on 2019 results and was determined by considering both quantifiable indicators such as sales and operating profit, as well as non-quantifiable factors like finding new business models or collaborating with other companies to establish a long-term growth foundation, the company explained.

This content was produced with the assistance of AI translation services.