'Stakeholders should be happy too'
: A need to revamp on distributive policies on windfall gains raised within the business community

Of the many issues facing Korea's semiconductor sector, how to deal with "excess profits" from the semiconductor super cycle has been one of the most hotly debated. In the business sector, it has generated labor-management strife over how much employees should receive in bonuses, starting with the bonus payments given to workers at SK hynix.

Chey Tae-won, chairman of SK Group and the Korea Chamber of Commerce and Industry, gave his take on companies earning major profits sharing the wealth. It was the first time the leader of SK Group addressed SK hynix's extra bonus payment in link to its operating profit agreed to last year. In response to SK hynix's move, unionized workers at rival chipmaker Samsung Electronics successfully negotiated a 12 percent bonus payment in May, and similar demands have started popping up in other industries.

Indicating a need to rethink profit distribution, at the Jeju Forum on July 15, Chey said, "It would be a problem if everyone were unhappy with it. But I do not see the issue that way. I want to keep our employees as happy as possible, but we must also share that happiness with our stakeholders. If employee happiness comes at the expense of stakeholders, that benefit will no longer be sustainable."

By stakeholders, he was referring to everyone, from the shareholders and executives, to employees, supplier companies, customers and local communities. Distributing the larger-than-expected profits earned by SK hynix and Samsung Electronics is beneficial in that it can incentivize workers while deepening trust between labor and management. But it has begun to drive a wedge between workers and management in various other industries, especially at automotive and information technology companies.

Companies should rethink how the salaries of CEOs and other executives are subject to shareholder approval, while the trillions of won in total extra bonuses paid out are not. It is time to think about mitigating the discrepancy between the two.

Globally, the semiconductor industry is at an uncertain point, as some people begin to think the artificial intelligence (AI) boom will slow down while others remain optimistic that it will remain lucrative in the long term. Companies must prepare for either contingency: prices dropping as mass production floods the market, or sustained demand pushing chip prices higher.

The semiconductor sector is critical to the Korean economy, accounting for a steadily increasing share of the nation's growing exports. Korea's per capita GDP is estimated to be $39,164 this year, according to the finance ministry, the Bank of Korea (BOK) and the National Data Agency. The BOK governor said that they took rising semiconductor prices into consideration when raising the interest rate to 2.75 percent.

Chey's comment on the distribution of windfall gains should be given serious consideration. The labor side remains adamant that profits be shared fairly. Meanwhile, the government seems divided by agencies. The trade ministry is stressing the need to reinvest those same excess profits — measured in terms of larger-than-expected profits — back into the industry, especially as the government is prioritizing the launch of three megaprojects to consolidate Korea's lead in AI by building semiconductor clusters in the southwestern region around Gwangju. On the other hand, the labor ministry has focused on fair distribution of those profits, calling their distribution a more "definitive reinvestment" in society.

These debates will be constructive, but in the long term. The topic requires both debate and consensus. What is certain is that Korea requires realistic methods of investing in the country's future. One option worth considering is relaxing the 52-hour workweek limit in critical sectors.

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