Samsung Electronics in Turmoil Over Union's "45 Trillion Won Bonus" Demand... "Why Only You?" Anger Grows

As the scale of performance-based bonuses at major corporations grows rapidly, concerns are mounting over widening compensation gaps, resulting in increased feelings of relative deprivation and worries about polarization in the labor market. Against this backdrop, the Samsung Electronics labor union's demand for a performance bonus equivalent to 15% of operating profit has come under the spotlight, spreading controversy over compensation systems during the semiconductor boom across the broader industry.

View of Samsung Electronics headquarters in Seocho-gu, Seoul on the 7th. Photo by Yonhap News.

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According to industry sources on April 16, the Samsung Electronics labor union recently demanded a performance bonus fund of 40.5 trillion won immediately after the company announced its preliminary first-quarter results (operating profit of 57.2 trillion won) on the 7th. This amount corresponds to 15% of operating profit, assuming the annual semiconductor operating profit reaches 270 trillion won. With securities analysts forecasting annual operating profits to reach the 300 trillion won range this year, if the union's demands are met, the maximum amount for performance bonuses could reach 45 trillion won.

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This is four times the approximately 11.1 trillion won in dividends paid by Samsung Electronics to its 4 million shareholders last year. In particular, it exceeds the 37.7 trillion won Samsung Electronics invested in research and development (R&D) last year. However, the union claims that it actually lowered its performance bonus demand during the negotiations. Choi Seungho, head of the Samsung Electronics Labor Union, stated in an interview with MBC Radio's 'Kim Jongbae's Focus' on the 14th, "We initially negotiated based on 20% of operating profit, but as the negotiations progressed and reached adjustments, we settled on 15%."

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With Samsung Electronics posting record-breaking earnings, the performance bonus amount demanded by the union is also expected to grow accordingly, but both inside and outside the industry, there are criticisms that the union's demand is excessive. A 45 trillion won bonus would amount to about 24% of the total operating profit earned by Korea's top 1,000 listed companies last year. According to an analysis by Korea CXO Institute of the operating profit and loss fluctuations at Korea's top 1,000 listed companies, last year's combined operating profit for these companies was tallied at 189 trillion won. Some analysts point out that an amount in the 40 trillion won range is enough to finance a large-scale merger and acquisition (M&A) or the acquisition of an artificial intelligence (AI) startup. This is more than four times the 9 trillion won that Samsung Electronics spent when it acquired Harman in the past.

Amid such controversy, protests criticizing the union have also taken place. A man in his 60s, surnamed Park, who introduced himself as "someone who loves Samsung," held a picket protest in front of Samsung Electronics' Seocho headquarters in Seoul on the morning of the previous day. He publicly voiced criticism toward the union, saying, "Sometimes, you have to know when to be satisfied."

Industry observers warn that the competition between the two leading semiconductor giants over performance bonuses could raise compensation levels across the board, sparking a vicious cycle in which the increased burden spreads throughout the industry. In particular, they point out that the wage and benefits gap between large corporations and small- and medium-sized enterprises could widen further, deepening the dual structure of the labor market.

The catalyst for the Samsung Electronics union's demands was last year's case involving SK hynix, which revised its performance bonus calculation method. Last year, the SK hynix union pressured management to change the performance bonus calculation to a fixed ratio linked to operating profit. As a result, employees received performance bonuses up to 600% of their base salary. Since then, SK hynix production workers have been dubbed 'Kingsanjik' (King + production worker), with their high level of compensation drawing attention, and dissatisfaction among Samsung Electronics employees in the same industry has also increased.

An office worker, surnamed Oh (29), said, "With the real economy and domestic market struggling due to war, I feel relatively deprived," adding, "Other industries are undergoing restructuring because of AI, but it seems there is not enough consideration for future investment funds when it comes to distributing profits."

Kim Yuntae, professor of sociology at Korea University, explained, "With salaries, bonuses, and stock options at global big tech companies driven by AI all increasing, the gap between export-oriented conglomerates and domestic- and smaller-sized companies is growing significantly. Income is becoming polarized, and it can easily cause psychological feelings of deprivation in society." He added, "While fair compensation for technological innovation is necessary, since some corporate growth is made possible by taxes paid by citizens, it is essential for fair distribution to society in order to achieve social integration."

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