Naver Finalizes 4.8% Wage Increase This Year... Lower Than Kakao

Wage Increase Rate Halved... Stock Grants Extended

Naver has decided to raise wages by 4.8% this year compared to last year. The wage increase rate has dropped to a single digit and is lower than Kakao's for the second consecutive year.

The Naver labor union conducted a wage and collective bargaining vote over two days starting from the 16th. The tentative agreement for a 4.8% increase was approved with a 61% approval rate.

The management initially proposed a 3.8% wage increase but slightly raised it to 4.8% following union opposition. This is far below the 11% increase demanded by the union. Instead, the stock grant, which was originally scheduled to be given only until next year, will be extended for two more years until 2026. A stock grant is a type of incentive where company shares are given free of charge instead of stock options. Naver promised to provide employees with stock grants worth about 10 million KRW per person annually for three years starting in 2021, when the IT industry saw fierce salary increase competition. Additionally, it was agreed to consult with the union when deciding the level of future performance bonuses.

Although the wage and collective agreement has been finalized, dissatisfaction remains high internally. This is because the increase has been halved compared to last year's 10% raise. Even considering the economic slowdown, the increase rate is low compared to other companies. This is why the approval rate, which used to be 70-80%, barely exceeded 60% this year.

In fact, the increase rate is lower than Kakao's. Kakao agreed on a 6% increase this year based on its headquarters. Last year as well, Naver's wage increase rate (10%) was lower than Kakao's (15%). Kakao employees also receive higher average salaries. Last year, the average salaries of Kakao and Naver employees were 139 million KRW and 134.49 million KRW respectively. These figures reflect the average including stock option exercise gains for all employees excluding registered executives. Since 2020, Kakao has led Naver in average salaries for three consecutive years, and the gap is expected to widen this year.

Naver significantly lowered the wage increase rate compared to the previous year due to increased management uncertainty. Although annual sales surpassed 8 trillion KRW for the first time last year, operating profit decreased. This is the first decline in operating profit in four years since 2018. This year, concerns remain about the impact on advertising revenue, a major source of income, due to the economic slowdown. Accordingly, Naver is focusing on cost reduction measures such as cutting employee performance bonuses and reducing the director compensation limit earlier this year.

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