SK hynix union threatens street protests unless Chairman Chey intervenes directly

In August last year, the SK hynix union held its first-ever "all-out struggle rally" at the Cheongju campus, and a second rally at the Icheon campus drew 7,000 of the union's 9,500 members. [Provided by SK hynix union]

The SK hynix union has sharply rejected management's proposal to pay part of employee bonuses in company shares subject to a lock-up period, warning that it will launch a fight unless SK Group Chairman Chey Tae-won personally steps in to resolve the dispute.

The union has not yet announced a specific form of action, but if it takes to the streets over the bonus dispute — as Samsung Electronics workers have already done — the world's two largest memory chip makers would simultaneously be engaged in public labor battles, an unprecedented situation in the industry.

SK hynix's three unions — representing workers at the Icheon and Cheongju campuses and the technical and office staff — jointly issued a statement Thursday laying out their position. "We have engaged in intense negotiations with management since June 24, but management ultimately failed to produce a result our members could accept," the unions said. "We express strong anger at management's irresponsible attitude."

The statement added that the unions felt "a direct decision by Chairman Chey Tae-won, the top executive, is necessary," warning that "if management evades that decision, the three unions will respond with a fight." The unions said further negotiations remained possible through the Liberation Day holiday period from Saturday through Monday, calling it "a final act of consideration."

The latest tension follows the fourth round of full wage and collective bargaining talks held July 30. In earlier sessions, management had proposed paying more than half of the performance bonus in shares rather than cash, with restrictions on selling those shares for a set period.

Management also reportedly raised the possibility of temporarily adjusting wages if the company falls into a loss.

At the time, management framed the proposal as an urgent need for "a solution that allows the company, the union and employees to wisely navigate various social demands together, earn the understanding of stakeholders, and take root as a sustainable system," calling on the union to show understanding and make a decision.

The union flatly rejected the offer. "We can never accept any proposal that undermines the spirit of last year's labor-management agreement on performance bonuses — particularly any arrangement that forces members to bear the risk of share price fluctuations," it said. "A plan to temporarily adjust wages on the grounds of a loss is also incompatible with the basic principles of a labor union."

SK Group Chairman Chey Tae-won delivers a congratulatory speech at the completion ceremony for the M16 fabrication plant at SK hynix's Icheon campus in February 2021. [Provided by SK hynix]

The dispute over performance bonuses at SK hynix stretches back five years. In 2021, management set the profit-sharing (PS) payout at around 20 percent of annual salary, prompting employees to complain that it was less than half the level at Samsung Electronics, which paid roughly 47 percent at the time.

One employee in their fourth year at the company emailed management demanding a clear explanation of the bonus calculation criteria. The situation worsened when about 20 union members staged a protest outside the M16 fabrication plant completion ceremony — on the very day Chairman Chey attended the event — holding signs reading "Executives feast on bonuses while workers get nothing."

Chey responded by pledging to return his entire annual salary from SK hynix — about 3 billion won ($2.12 million) — to be shared among employees. "There needed to be more empathy and communication on the PS issue," he said. "I hope this becomes an opportunity for the matter to be resolved well."

Labor and management subsequently agreed to change the PS calculation benchmark from economic value added to operating profit, fixing roughly 10 percent of operating profit as the PS funding pool.

Tensions flared again last year over a cap on the bonus payout. The union argued that despite the 2021 agreement tying PS to 10 percent of operating profit, a ceiling of 1,000 percent of base salary remained in place, preventing workers from receiving full performance-based compensation. It called for the cap to be abolished.

Last August, around 250 union members staged a street protest in front of SK's Seorin Building in Jung-gu, Seoul, timing the action to coincide with the final day of the "SK Icheon Forum," which was attended by Chairman Chey and about 200 other group executives.

The union then held its first-ever "all-out struggle rally" at the Cheongju campus, followed by a second rally at the Icheon campus that drew 7,000 of the union's 9,500 members.

Ultimately, labor and management reached a deal last year to abolish the PS cap and maintain the new system for 10 years. Under the agreement, 80 percent of the PS payout would be delivered in cash in the year it is earned, with the remaining 20 percent — paid out at 10 percent annually — deferred over two years.

Last August, the SK hynix union held its first-ever "all-out struggle rally" at the Cheongju campus, and a second rally at the Icheon campus drew 7,000 of the union's 9,500 members. [Provided by SK hynix union]

Some observers note that the situation today differs from the earlier disputes, when the union succeeded in forcing institutional change. A key variable is the public backlash that built up over the first half of this year following the bitter standoff between Samsung Electronics and its union over bonuses, which has hardened public sentiment against large conglomerate bonus practices.

A senior SK hynix union official recently acknowledged the difficulty at a public event, saying that while past negotiations had been a straightforward one-on-one between labor and management, "now we are watching public opinion, the broader public and even the government, which makes bargaining considerably harder."

Internal divisions are also emerging. A new "integrated union" spanning both production workers and technical and office staff has been formed by employees who believe the existing unions are not fighting hard enough for workers' rights.

Dissatisfaction with the existing unions' lack of transparency in the negotiation process — and their practice of letting a small group of delegates decide key issues rather than the full membership — also drove the new union's formation. Within less than a week of its launch, membership surpassed 2,400, already exceeding the total enrollment of the existing technical and office staff union.

The business community is watching anxiously, worried that an unprecedented situation could unfold in which the SK hynix union also takes to the streets.

"The combined market capitalization of Samsung Electronics and SK hynix exceeds $2 trillion — larger than South Korea's entire GDP," one business community official said. "Because they already affect the entire national economy, this can no longer be left to the companies alone. Society as a whole needs to find a solution together."

The official added that "there is still considerable confusion over whether a performance bonus set at a fixed percentage of operating profit is even a legitimate subject of industrial action, and that issue needs to be resolved first."

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