Freezing Performance Pay Risks Wave of Strikes in Semiconductor, Auto, and Shipbuilding Sectors

Conflicts between labor and management over performance pay are intensifying across key domestic manufacturing industries, including semiconductors, automobiles, shipbuilding, and steel, raising the specter of a wave of strikes.

The production workers' union at SK Hynix will begin a two-day ratification vote on the 24th regarding the tentative agreement for the 2026 wage collective bargaining, which stems from a performance pay system change agreed upon a year ago. If the vote fails, SK Hynix's management schedule will be thrown into an unpredictable state. The core of the agreement involves paying 40% of the excess profit sharing (PS) in cash and the remaining 60% in company shares. Of the company shares, 40% can be sold in the current year, while 20% is deferred and paid out in installments of 10% over two years. For the 2026 portion to be paid next year, members can opt to receive the 40% of eligible sellable shares in cash, allowing for a maximum of 80% to be received in cash.

The Hyundai Motor union has resumed wage negotiations at its Ulsan plant and has suspended a four-hour partial strike that was scheduled for the 24th. Labor and management are currently in a tug-of-war over the scale of wage increases, a 50% hike in bonuses, the reinstatement of fired union members, and the extension of the retirement age. Since negotiations stalled in May, the union has held frequent partial strikes, and on the 21st, it launched an 8-hour full-scale strike for the first time in a decade. This process has resulted in a cumulative production loss of over 55,200 vehicles and 2.3 trillion won in lost sales.

The HD Hyundai Heavy Industries union has applied for labor dispute mediation to the Central Labor Relations Commission and will enter into a strike vote from the 25th to the 27th. They are demanding a basic salary increase of 149,600 won, along with a requirement to use 30% of operating profit as a resource for performance pay.

A business official stated, "Each company is facing investments worth trillions of won to secure future growth engines," adding, "Excessive performance pay distribution will inevitably lead to a deterioration in corporate competitiveness. Both labor and management need to find an amicable agreement." These companies play a pivotal role as the core pillars of domestic industry.