Samsung, Hyundai IT Arms See Unionization Surge Amid Pay Disputes

A wave of unionization is sweeping through South Korea's major IT service firms, with Samsung SDS and Hyundai Autoever establishing labor unions. This movement signifies a notable shift, as these large corporate IT affiliates, previously less unionized than their counterparts in the Pangyo IT cluster, are now seeing significant employee organization.

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The company proposed a plan to abolish the existing target incentive (PI) paid in cash and pay it in company stock, reflecting the pre-tax profit growth rate and stock return compared to the previous year, reflecting 20% of the annual salary.

At Samsung SDS, the newly formed union, affiliated with the Federation of Korean Trade Unions, reported over 6,000 membership applications within three days of its launch, exceeding half of the company's total workforce. The primary catalyst for this union's formation was the company's proposed overhaul of its incentive system, which would replace cash-based performance incentives with company stock, with payouts tied to factors like pre-tax profit growth and stock performance. Employees expressed concerns that external market variables would heavily influence their compensation.

Similarly, Hyundai Autoever, a key IT affiliate of the Hyundai Motor Group, officially announced its union's establishment. This union, part of the Korean Chemical, Fiber and Food Workers' Union under the Korean Confederation of Trade Unions, is currently forming its executive committee. Accumulated dissatisfaction with performance bonus calculations and personnel evaluation methods are cited as the background for this move.

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Accumulated dissatisfaction with performance bonus calculation standards and personnel evaluation methods is cited as the background for the union's establishment.

Industry observers believe that the substantial performance bonuses awarded by SK Hynix and Samsung Electronics earlier this year have fostered a broader consensus on the need for unionization within large IT companies. The widening gap in performance-based pay across different sectors and companies is driving employees to seek resolutions for their grievances regarding evaluation and compensation systems through collective bargaining.

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The gap in performance-based pay between industries and companies is widening, and the movement to resolve dissatisfaction with evaluation and compensation systems through labor-management negotiations is growing.