SK Hynix’s Korean workers launch unified union amid stalled wage talks

In South Korea, a new labour union emerged on Thursday, aiming to unify nearly 2,500 SK Hynix employees under one collective bargaining platform. This development follows ongoing negotiations between SK Hynix and its existing unions over annual wage increments, amid the company's record quarterly profits driven by demand for AI technology.

The newly formed union announced its establishment after receiving approval from the government. Unlike previous unions that focused on specific job roles or locations, this new organization intends to represent all SK Hynix staff, including factory workers, technical personnel, and office employees spread across multiple facilities such as Icheon and Cheongju.

The primary objective of the new union is to become the majority union by recruiting at least half of the company's workforce, empowering it to exert stronger influence in negotiations with management. Should it achieve this goal, the union would possess enhanced leverage in securing favorable labor terms.

SK Hynix's existing agreement with its unions stipulates that 10% of the company's annual operating profit will be allocated annually as employee bonuses in cash for the next decade. However, SK Hynix proposed shifting the majority of these bonuses to share-based compensation this year, citing Samsung Electronics' recent decision to do the same.

Experts suggest that the shift to stock-based bonuses could prompt unions to pursue additional benefits like housing loans, comparable to those offered by rival Samsung Electronics. While workers may find this arrangement appealing, industry observers note that equity-based bonuses are more prevalent in the United States due to the volatility of Korean stock markets.

The debate surrounding stock compensation extends beyond union negotiations, as investors question whether allocating 10% of operating profit to employees might diminish funds available for investment or impact shareholder returns. In May, Samsung Electronics reached an agreement with its unionised workforce, allocating 10.5% of its annual semiconductor operating profit to special bonuses in the form of company stock, with the immediate sale of a majority of these shares restricted.