“Performance Bonuses in Local Currency” Ruling Party Introduces Bill Amid Samsung and SK hynix Bonus Controversy... Labor Unions Oppose

Ruling Party Proposes Bill on Paying Bonuses in Local Currency

KCTU: "Some Workers May Be Unable to Refuse"

FKTU: "Using Workers' Wages as a Policy Tool"

The card-type Gyeonggi local currency image is unrelated to the specific content of the article. Yonhap News

As the global “supercycle” for semiconductors accelerates due to increased investment in artificial intelligence (AI), the performance of Samsung Electronics and SK hynix is surging. As a result, the size of performance bonuses to be paid early next year is also expected to reach astronomical levels, sparking not just internal corporate debates over compensation but growing into a broader social controversy. Amid this, a bill has been introduced that would allow companies to pay part of performance bonuses or other incentives in local currency, which is intensifying debate among labor unions and political circles.

Democratic Party proposes partial amendment to Labor Standards Act...

“Foundational virtuous cycle to boost the local economy”

According to the National Assembly legislative information system on the 8th, Park Minkyu, a lawmaker from the Democratic Party of Korea, has sponsored a partial amendment to the Labor Standards Act that would allow, when stipulated in a collective agreement or with the explicit consent of employees, part of wages—including performance bonuses—to be paid in “local love gift certificates or other forms of currency specified by Presidential Decree” rather than cash. Under the current Labor Standards Act, wages must in principle be paid in full and directly in cash (legal currency), butpayment by means other than cash is permitted if there are special provisions in the law or a collective agreement.

Assemblyman Park cited the need to create a virtuous cycle in which large corporate performance bonuses flow into neighborhood businesses and traditional markets as a key reason for the bill. He also pointed to the longstanding issue that a significant portion of foreign workers’ wages is remitted abroad, limiting the economic impact on local communities.

Growth fueled by government support... Fairness controversy emerges

In fact, some have recently argued that since Samsung Electronics and SK hynix have grown thanks to unprecedented tax incentives and public funding from the government, their “lottery-level” bonuses should be returned to society through local currency, to be shared with all citizens.

Related image. The Asia Business Daily DB

Through the “K-Chips Act” in 2023, the government provided up to a 20% tax credit for research and development as well as facility investment. Over the past two years, it is estimated that the two companies received around 20 trillion won in tax benefits. In addition, infrastructure support through the Special Semiconductor Act and policy financing further concentrated public support across the industry. Especially during downturns, the Korea Development Bank supplied low-interest loans, and foundational infrastructure—such as roads, electricity, and water supply—was also built under government leadership.

Labor Unions: “Undermining wage payment principles... Effectively a real wage cut”

As soon as the bill was made public, major labor groups, including the Korean Confederation of Trade Unions (KCTU) and the Federation of Korean Trade Unions (FKTU), immediately issued statements demanding its full withdrawal. Labor unions’ greatest concern is the collapse of the Labor Standards Act’s core principle of “payment of wages in legal tender and direct payment.” The FKTU stated, “Wages are not a means to achieve policy goals, but property rights that must be fully guaranteed as compensation for labor,” adding, “Forcing or steering workers to use their compensation in a particular way or restricting how it can be spent is a fundamentally misguided approach.”

There has also been criticism that the bill’s premise of “explicit consent from employees” is unrealistic and out of touch with the harsh realities of the workplace. The KCTU argued, “Given the power imbalance between management, which holds authority over human resources and employment, and employees, such consent cannot be considered truly voluntary,” and warned, “Many workers will in practice be pressured into agreeing, whether due to hiring processes, performance evaluations, or internal corporate culture.”

The Gunsan Sarang Gift Certificate image is unrelated to the specific content of the text. Ministry of the Interior and Safety

It is also widely believed that the negative impact would be concentrated on workers at small and medium-sized enterprises or those in non-regular positions, who have less bargaining power. While unions at large companies could defend against such measures through collective agreements, vulnerable workers with little leverage against management would find it difficult to refuse. Given the characteristics of local currency—such as usage restrictions and expiration dates—most see this as effectively a “real wage cut” amid ongoing inflation.

Opposition Lawmaker Yoon Sanghyun: “Restricting workers’ freedom of consumption”

The political dispute is also intensifying. On the 9th, Yoon Sanghyun, a lawmaker from the People Power Party, wrote on Facebook, “Why should workers who have worked hard and produced results have even the way they spend their earnings dictated to suit the preferences of politicians?” He criticized, “Telling people they must spend their bonuses only at designated places within their region is an arrogant restriction of workers’ freedom to choose how they consume.”

Yoon further commented, “If this logic holds, we may someday see calls to pay out the national pension in local currency as well,” adding, “I am concerned that we could end up telling our seniors, ‘Now that your pension has been disbursed, please do your grocery shopping at the designated local mart using local currency.’” He concluded, “This is a textbook case of populist overreach driven by a lack of understanding of the market economy and a reckless push for local currency. Legislation that holds workers’ rightful compensation and freedom of consumption hostage to a local currency panacea must be withdrawn immediately.”

This content was produced with the assistance of AI translation services.