Strike Risk Looms Over Pangyo... Kakao Enters Labor Commission Mediation Today

In the IT industry, labor-management conflicts over performance-based compensation systems are coming to the forefront. With Kakao entering mediation procedures due to a breakdown in wage negotiations, there is a looming threat of a strike. Concerns are being raised that, depending on the outcome at Kakao, further labor disputes could arise in the IT sector in the future.

According to industry sources on May 18, Kakao's headquarters labor-management parties will undergo mediation procedures at the Gyeonggi Regional Labor Relations Commission starting at 4:30 p.m. on this day. A Kakao representative stated, "We will sincerely participate in the commission's mediation process, will always keep the channel of communication with the union open, and will do our utmost until the end to reach an amicable agreement."

The Kakao Branch (Crew Union) of the National Chemical Fiber Food Industry Labor Union, amid labor-management conflict over the performance compensation system, submitted a mediation application to the Gyeonggi Regional Labor Relations Commission on May 7. This application involved unions from five Kakao affiliates: Kakao, Kakao Pay, Kakao Enterprise, DK Techin, and XL Games.

The Kakao Branch of the National Chemical, Textile, and Food Industry Labor Union (Crew Union) held a rally last March in front of Kakao Pangyo Ajit in Seongnam-si, Gyeonggi-do, opposing the spin-off of Contents CIC (an in-house independent company) that operates the portal service "Daum". Photo by Yonhap News

If the labor and management at Kakao headquarters fail to reach an agreement, the Kakao union could face the possibility of its first-ever strike since its founding. Currently, the two sides have been unable to narrow their differences regarding the structure design of compensation programs, including performance bonuses.

The union cited the imbalanced structure of performance distribution and the management's unilateral decision-making process as causes of the conflict. They also mentioned excessive working hours, insufficient response to workplace harassment allegations, and forced consent for digital forensics on members. In particular, the union refuted the view that the breakdown in negotiations was due to their demand for performance bonuses at 13% to 15% of operating profit. According to the union, the operating profit-linked performance bonus system was only one of several options discussed during the talks. The core issues in the breakdown of negotiations, they argued, were not the size of the bonuses themselves but the need to improve overall compensation systems, including transparency in compensation criteria, the structure of performance distribution, and long-term service rewards.

If mediation is suspended due to a failure to reach an agreement, the union plans to determine whether to strike through internal procedures such as a vote among union members. Already, Kakao Enterprise and Kakao Pay secured the legal right to strike by suspending their respective mediation procedures on May 14 and 15.

Meanwhile, Naver, another major platform company, concluded its wage negotiations without major friction. On May 11, Naver management and the Naver Branch of the National Chemical Fiber Food Industry Labor Union (Naver Union) reached a tentative agreement to increase wages by 5.3% this year. This came about three weeks after concentrated negotiations between labor and management.

The game industry has also been relatively quiet this year. In March, Nexon labor and management agreed to a 6% increase in base salary, and on May 13, NC also signed a collective bargaining agreement to raise the average annual salary by 3 million won. However, since last year the Neople union, a Nexon subsidiary and the developer of "Dungeon & Fighter," went on the industry's first general strike, there are observations that labor-management conflicts could still emerge at some companies in the future.

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