[Editorial] Lost workdays up 45%: Bonus disputes eating away at the future

Demands for performance-based profit sharing, sparked at companies riding the semiconductor boom such as Samsung Electronics Co., Ltd. and SK hynix, are spreading to major manufacturing sectors such as autos and shipbuilding, leaving workplaces across the country beset by strikes.
This year, debates over profit sharing have been at the heart of acute labor-management conflicts on manufacturing floors. As these conflicts spread across the broader industrial sector, disagreements between labor and management are likely to deepen further next year. Data released on the 8th by the Korea Enterprises Federation show that, as of the end of September, labor disputes had resulted in about 489,000 lost workdays this year, up 45.2% from the same period last year. The number of disputes fell, but the increase in lost workdays means strikes at larger workplaces were more intense and lasted longer.
Clashes were indeed fierce at companies that represent Korea. Hyundai Motor's union launched an eight-hour all-out strike for the first time in 10 years, since 2016. The shipbuilding industry, locked in fierce competition with China, also saw frequent clashes, including partial strikes, amid labor-management tensions. Needless to say, clashes were also intense at Samsung Electronics Co., Ltd. and SK hynix, which sparked demands for N% performance bonuses. Performance bonuses are unquestionably the central issue in labor-management conflicts at large companies this year. This was the year that differences between labor and management came to the fore over providing employees with incentives based on operating profit or net profit. These debates over bonuses will become a key issue in labor-management negotiations, recurring year after year.
Aside from the debate over performance bonuses, new issues on the agenda include raising the retirement age and whether to abolish the wage peak system. Debate over workforce reductions following the emergence of physical robots is also heating up. The potential decline in the existing workforce as robots are deployed on production floors is emerging as a new point of contention between labor and management. Labor-management conflicts breaking out in various places are spreading beyond booming industries to other sectors, including steel, that are struggling.
It is not that we fail to understand the rationale behind calls to share profits. But the priority should be to secure funds for investment and focus on research and development. That is how companies grow and secure a future. Unions, too, depend on companies existing. Focusing too much on immediate profit-sharing could harm a company's long-term viability. If companies disregard the future and growth and become complacent with the status quo, they could collapse in an instant.
We should be wary of excessive expectations that the boom will continue. There are business cycles, and a downturn could come someday. To prepare for that, companies need to increase investment in innovation. A boom, when companies have the financial resources, is the right time to step up investment. If instead they greedily consume every windfall in front of them, how will they increase investment?
For Korean companies to gain global competitiveness, they must first change their outdated labor-management culture. It is time to move beyond the wasteful 'strike or concession' dynamic and for companies, too, to establish transparent compensation systems in line with market principles. At the same time, they must also pursue reforms to shift from seniority-based pay to a system centered on job responsibilities and performance.
Both labor and management must face the reality that the current boom cannot last. We expect the global economic environment next year to be far more uncertain than this year. Forecasts of a decline in the artificial intelligence industry depending on the outcome of the U.S. midterm elections are already roiling the stock market.
We cannot assume that the recent crisis in European manufacturing has no bearing on us. The heavy burden of high wages and the turmoil in welfare systems facing Europe, along with the sweeping offensive by Chinese companies, are already problems for us, too. If we expect these developments to reach us soon, this is no time to be preoccupied with sharing.