Major Corporations Increase Wages Significantly... The 'New Hire 100 Million Won Era' Approaches Quickly

Major Semiconductor Companies Near 100 Million KRW Starting Salary for New Employees
Intense Competition for Talent Amid Record High Sales Drives Higher Pay and Performance Bonuses
Concerns Over Wage Inflation Amid High Inflation Persist

[Asia Economy Reporter Park Sun-mi] As South Korea's semiconductor and electronics industries, centered around large corporations, compete to secure top talent by raising wages and welfare levels, the annual salary of first-year new employees has approached 100 million won. Although the government recently requested companies to refrain from excessive wage increases due to worsening inflation, it is analyzed that upward adjustments were inevitable due to union pressure following record-breaking performance streaks and intensified competition for talent acquisition.

According to the industry on the 18th, SK Hynix will complete the employee consent process within this week to raise wages by 5.5% compared to last year and additionally approve a fixed monthly base pay increase of 100,000 won, which corresponds to an average annual salary increase of 2 million won based on performance evaluations.

The starting salary for new university graduates at SK Hynix, which was 50.4 million won last year, is expected to rise to around 53 million won, surpassing Samsung Electronics (51.5 million won). Considering that last year's new employees received total compensation in the high 90 million won range, including various bonuses such as Profit Sharing (PS), Productivity Incentive (PI), and welfare points, it is estimated that the annual compensation for new employees this year will reach 100 million won.

Earlier, SK Hynix announced that it would pay the maximum PI incentive, equivalent to 100% of the base salary, as a reward for the first half of the year. With the second-quarter business results to be announced on the 27th expected to be the highest ever, the PS, which is paid once a year up to 50% of the annual salary depending on yearly performance, is also anticipated to remain at last year's level.

The situation at Samsung Electronics, which is set to announce its highest-ever second-quarter results on the 28th, is similar.

Samsung Electronics recently agreed through labor-management consultations to increase the average wage of all employees by 9% in 2022. The starting salary was raised from 48 million won to 51.5 million won, marking the first time it has exceeded 50 million won. Samsung Electronics also paid the maximum PI incentive of 100% of the base salary to its main business units, including semiconductors, smartphones, and TVs, for achieving first-half targets on the 8th. Considering the Over-Profit Incentive (OPI), which pays up to 50% of individual annual salary within a 20% limit of that year's excess profits, and special incentives, the annual compensation for new employees in the semiconductor division is about 90 million won.

Earlier, DB Hitek, which operates a foundry business, raised the starting salary for new employees by 14.29% from 42 million won to 48 million won in April to secure necessary semiconductor personnel. The performance bonus cap was also increased from 33% to 50% of the annual salary, matching Samsung and SK Hynix levels. Applying the revised standards, the maximum salary for new employees this year is 72 million won.

LG Electronics, competing with Samsung Electronics in the home appliance business, raised the average employee wage by 9% last year, the largest increase in 10 years, and confirmed an average wage increase rate of 8.2% this year. Accordingly, LG Electronics' starting salary for new employees rose by 3 million won to 49 million won compared to last year. Earlier this year, LG Electronics paid performance bonuses ranging from 400% to 660% by business unit in the Home Appliance & Air Solution (H&A) division, which had the best performance, and additionally provided a special incentive of 5 million won to celebrate achieving the number one global sales position.

An industry insider explained, "The younger generation has a clear concept of compensation and a free attitude toward job changes, leading to fierce competition among industries to secure top talent," adding, "The semiconductor and electronics industries have consistently improved performance, creating an environment where wages can be raised."

However, concerns have been raised that the high wage increase rates and performance bonus competitions, mainly among some large corporations, could accelerate the pace of inflation. Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho pointed out, "Excessive wage increases not only worsen the high inflation situation but also increase the relative deprivation of small and medium-sized enterprises and vulnerable workers, potentially amplifying social conflicts."

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