South Korea's SK Hynix union approves tentative wage deal with management, source says

SEOUL: South Korean chipmaker SK Hynix's union has ratified a new wage deal with management, according to a source. The agreement, which faced weeks of uncertainty after workers initially rejected an earlier proposal, received support from 57.1% of union members, with 8,731 votes in favor, the source reported. The vote included employees from the company's production workers' union at its Icheon and Cheongju sites.

The approval follows a rejection of an initial tentative agreement on August 20, prompting management and labor representatives to return to negotiations. Under the revised deal, the share of profit-sharing bonuses paid in cash will increase to 50% from 40%, while the portion paid in company shares will decrease to 50% from 60%, the source explained.

The agreement is anticipated to finalize SK Hynix's wage and collective bargaining discussions for the year. The original tentative agreement, announced in August, called for a 6.3% wage increase and a significant revision of the company's profit-sharing payout structure, with 40% of bonuses previously paid in cash and 60% in treasury shares.

This proposal faced opposition from some workers who believed bonuses should remain primarily in cash. SK Hynix disclosed record operating profits of 60.54 trillion won ($44.19 billion) in the second quarter, driven by demand for AI-related memory chips. The compensation framework, allocating 10% of operating profit to employee profit-sharing bonuses, was considered a groundbreaking labor agreement when introduced but became contentious when management suggested a larger share of bonuses in stock instead of cash. SK Hynix did not immediately provide a response to a request for comment.