Nam Hyun-woo has worked as a staff writer at The Korea Times since 2013, mostly covering business and politics. He currently belongs to the Business Desk where he covers topics such as emerging tech, AI, ICT and Korea's chaebol community. Prior to joining the team, he was the paper's correspondent for the presidential office of Korea during the Yoon Suk Yeol and Moon Jae-in administrations.
Top Korean firms face strike threat amid disputes over incentives
SK hynix headquarters in Icheon, Gyeonggi Province / Yonhap
By Nam Hyun-woo
SK hynix, Hyundai Motor unions poised for walkout as talks stall
The specter of strikes is looming over SK hynix and Hyundai Motor as their respective labor unions remain dissatisfied with proposed incentives, adding to the headwinds facing the nation’s chip and automobile sectors, both already bracing for U.S. tariff pressures.
According to industry officials Thursday, SK hynix’s two unions representing production workers have declared negotiations deadlocked, rejecting management’s proposed incentives.
The company’s three labor unions, including its office workers’ union, staged a rally on Tuesday at the company’s headquarters in Icheon, Gyeonggi Province, demonstrating solidarity ahead of a potential general strike. The protest followed an earlier rally on Aug. 6.
At SK hynix, the union representing technical and office workers negotiates wages separately from the unions representing production workers at its Icheon and Cheongju plants, though their demands are generally similar.
Since May, the production unions and management have held 10 rounds of negotiations, but failed to narrow their differences over incentives, known as the “profit sharing” system.
The chipmaker has allocated 10 percent of the previous year’s operating profit to fund the profit sharing system since 2021. In the latest rounds of negotiations, management proposed raising the profit sharing ceiling from the current 1,000 percent of base pay to 1,700 percent, while directing half of the remainder into pensions or installment savings.
However, the unions are demanding that the full 10 percent of this year’s operating profit be paid out through the profit sharing system early next year. SK hynix’s operating profit is estimated to reach 37 trillion won ($26.8 billion) this year, meaning the company has to pay 3.7 trillion won as incentives if management accepts the unions’ demand.
With its high-bandwidth memory (HBM) business booming amid soaring demand for artificial intelligence (AI) accelerators, SK hynix posted record earnings last year and is expected to set new highs this year.
The unions argue that employees deserve fair compensation, as they endured an operating loss in 2023, but the company noted that it seeks to “ensure sustainable and stable compensation for employees from a long-term perspective.”
Hyundai Motor labor union members hold signs during a rally ahead of this year’s collective bargaining negotiations at the company’s Ulsan plant, June 26. Yonhap
Hyundai Motor is facing a similar situation. The company's union is demanding a 141,300-won increase in base pay this year, a performance bonus equivalent to 30 percent of last year’s net profit and an increase in annual bonuses. Management, on the other hand, has reportedly cited difficulties stemming from U.S. tariff measures.
During the 17th round of negotiations on Wednesday, the labor union declared negotiations deadlocked, citing management’s failure to present a proposal.
The Hyundai Motor union plans to file for mediation with the National Labor Relations Commission and hold a vote on whether to strike.
Unlike SK hynix, Hyundai Motor’s profitability is expected to slide this year amid pressure from U.S. auto tariffs. SK Securities projects that the company’s operating profit in the third and fourth quarters of 2025 will drop by more than 1.8 trillion won.
Industry officials said it remains to be seen whether the unions at the two companies will actually stage a general strike.
On Tuesday, just hours before SK hynix unions staged their rally, company CEO Kwak Noh-jung held a communication session with employees and said he would work to “ensure that all members receive performance bonuses on a consistent basis.”
An official at the company said “the company also regrets the negotiations have not gone well” and “we also understood that the company (management) has plans for further talks.”
Industry officials also note that the Hyundai Motor union has not staged a strike since 2019, despite multiple breakdowns in negotiations during that period.
“Despite the breakdown declaration, the management and the union have agreed to continue working-level negotiations during the labor commission’s arbitration period, and will seek common ground through in-depth discussions during that time,” a Hyundai Motor official said.