Keeps Rising... The Era of New Employee Annual Salaries of 100 Million Won 'Approaches' (Comprehensive)

Semiconductor and Electronics Industry Face Labor Shortage, Leading to Top-Level Wage and Welfare Competition
New Graduate Annual Salary Approaching 100 Million Won Era

[Asia Economy Reporter Park Sun-mi] As the domestic semiconductor and electronics industry, centered on large corporations, competes 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 wage increase approval process with its members within this week, raising wages by 5.5% compared to last year, and additionally confirm 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 performance 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 PI incentive, a mid-year encouragement bonus, at the maximum rate of 100% of the base salary. The second-quarter business results to be announced on the 27th are also likely to be the highest ever, so the PS, which is paid once a year up to 50% of the annual salary depending on yearly performance, is expected to remain at last year's level.

The situation at Samsung Electronics, which is expected to announce record-high 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 surpassed 50 million won. Samsung Electronics also paid the maximum PI incentive of 100% of the base salary for the first half of this year on the 8th to its main business units, including semiconductors, smartphones, and TVs. Considering the Over-Profit Incentive (OPI), which pays up to 50% of the 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 raised 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, which competes with Samsung Electronics in the home appliance business, raised the average wage of its employees by 9% last year, the largest increase in 10 years, and confirmed an average wage increase rate of 8.2% this year. Accordingly, the starting salary for new employees at LG Electronics 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 its best-performing Home Appliance & Air Solution (H&A) division and additionally provided a special incentive of 5 million won to commemorate 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, so competition among industries to secure top talent is fierce," 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. According to Statistics Korea, the consumer price index in June rose by 6.0% compared to the same month last year, marking the highest increase since November 1998 (6.8%) during the foreign exchange crisis. Inflation rates recorded around 3% from October last year to February this year, then entered the 4% range in March (4.1%) and April (4.8%), rose to the 5% range in May (5.4%), and reached the 6% range in June.

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho recently expressed concerns during a meeting with the Korea Employers Federation chairpersons that large corporations are competitively leading high wage increases under the pretexts of performance rewards or talent acquisition. He pointed out, "Excessive wage increases not only exacerbate the high inflation situation but also increase the relative deprivation of small and medium-sized enterprises and vulnerable workers, and can amplify social conflicts."

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