Baek Byung-yeul is a journalist at The Korea Times focused on cultural content, including films and cultural events in South Korea. You can contact him at baekby@koreatimes.co.kr to share your insights.
SK hynix hit by labor unrest
SK Group Chairman Chey Tae-won, center, attends a ceremony commemorating the completion of SK hynix's new semiconductor-manufacturing plant called M16 in Icheon, south of Seoul, Feb. 1. / Courtesy of SK hynix
By Baek Byung-yeul
By Baek Byung-yeul
Unions at SK hynix are urging management to take a more equitable stance when calculating profit-sharing bonuses, claiming that the company gave lower-than-expected incentives despite the world's second-largest memory chip maker seeing more than an 84 percent increase in operating profit in 2020 from a year earlier.
The company notified its employees that it would provide profit-sharing bonuses, equivalent to 20 percent of their annual salaries, but the unions protested the management's decision, claiming the amount was insufficient compared to what employees at rival companies received.
The unions also asked management to transparently share the company's economic “value added,” which refers to a calculation of how much profit remains after deducting the costs of a company's capital spending from its operating profit.
They also staged a protest in front of SK Group Chey Tae-won, who visited SK hynix's newly built chip-manufacturing plant in Icheon, Gyeonggi Province, Feb. 1, demanding he establish a new metric for calculating bonuses.
Facing the backlash from employees, SK Group Chairman Chey Tae-won promised he would return all his salary and incentives he received from SK hynix last year, which is around 3 billion won ($2.7 million). “I couldn't understand the pain of employees. I apologize for the lack of communication as well,” the chairman said.
SK hynix said the company has not decided yet about how to use the 3 billion won the group chairman handed over.
The company said the two sides had a meeting Thursday to narrow the gap in their opinions on the profit-sharing bonus issue.
“As this is the first time they have met in one place to talk about the bonus issue, we expect the two sides will explain each other's standpoints regarding the issue,” an SK hynix official said.
The meeting was held two days after CEO Lee Seok-hee sent an email to employees. In his message, Lee promised the company will fix the profit-sharing system and strengthen communication between management and employees.
“In his message, the CEO said the company will be more transparent regarding incentives. As he mentioned, the company will also try to strengthen its communication efforts with employees so that the two sides can narrow down their opinions,” the company official said.
Despite the impact caused by the COVID-19 pandemic, SK hynix performed well in 2020, generating an operating profit of 5.01 trillion won, up 84.3 percent from the previous year. The company's sales stood at 31.9 trillion won, an 18.2 percent increase year-on-year.
In the fourth quarter of 2020, SK hynix posted an operating profit of 965.9 billion won, a whopping 298.3 percent increase year-on-year. The company said the improved performance was possible as it actively responded to robust demand for memory chips for mobile devices.