Samsung Group union coalition demands reform of bonus system

A coalition of unions from 13 Samsung Group affiliates demanded reforms in the group’s performance-based bonus system Tuesday, following a recent change in the system of local rival SK hynix that is expected to sharply boost its bonus payments.

The alliance called for greater transparency in the calculation of bonuses in a press conference held in front of Samsung Electronic’s Seoul headquarters, pointing to that of SK hynix as a model example.

Oh Sang-hoon, the head of the union coalition, said Samsung has been “unilaterally setting the standards for incentive payouts without consulting the union, only notifying workers of the results.”

The coalition pointed to SK hynix’s system as a model for “transparent performance-based pay,” calling it an example of a labor-management relationship that promotes fairness and cooperation.

Earlier this year, SK hynix’s management and union agreed to remove the ceiling on profit-sharing payouts and set bonus payments at 10 percent of operating profits.

Samsung Group currently uses the excess profit incentive (OPI) system, which calculates bonuses by deducting certain costs, such as taxes and investment spending, from the operating profit.

Under such a system, even when profits are high, the final bonus payout may end up being relatively small.

“Representing 300,000 Samsung workers, we decided to hold the press conference to urge Chairman Lee Jae-yong and Samsung Group to adopt a transparent bonus system similar to that of SK hynix,” the alliance said in a statement.