Fatter Pay Envelopes in the Shipbuilding Boom

Average Payout at HD Hyundai Heavy Industries Up by 10.61 Million Won
Performance Bonuses Now 10% of Operating Profit
Samsung Heavy Industries Also Raises Base Pay, Changes Bonus Criteria

Fueled by the boom in the shipbuilding industry, the distribution of performance-based compensation is expanding in wage negotiations among Korea's three major shipbuilding companies. Samsung Heavy Industries has agreed to raise its base salary and change the method for calculating bonuses, while HD Hyundai Heavy Industries has also prepared a tentative agreement with increased compensation compared to last year. Hanwha Ocean is in the final stages of negotiations, focusing on the scope of base salary increases and the standards for performance-based bonuses.

According to industry sources on October 1, labor and management at HD Hyundai Heavy Industries reached a tentative agreement on wages and collective bargaining the previous day, including a base salary increase of 120,000 won, a one-time payment of 11 million won plus an additional 200%, and performance-based bonuses.

The company estimates that the average payment per union member will be 40.56 million won, an increase of 10.61 million won compared to last year. The union will decide whether to accept the proposal through a vote among members on October 2.

The main issues in the negotiations were how much of the record profits from the industry boom should be reflected in fixed salaries, and adjusting working conditions due to the integration of HD Hyundai Mipo. A union official explained, "Another key issue was determining how to standardize the different working conditions between the two entities."

Samsung Heavy Industries concluded its wage negotiations on September 23 with 58.78% of union members voting in favor. The company agreed to raise base pay, including the regular annual increment, by 131,786 won (5.2%) and pay a total incentive of 7 million won.

The method for calculating performance bonuses was also changed. The criteria for the Over-Performance Incentive (OPI) fund was revised from 20% of economic value added (EVA) to 10% of operating profit. Thus, the basis for distributing performance-based pay was also adjusted alongside the salary increase.

Hanwha Ocean is continuing negotiations over the amount of the base salary increase and the standards for calculating performance bonuses. The union is demanding the public disclosure of detailed evaluation criteria for each performance metric, while management has proposed the formation of a task force (TF) to discuss potential system improvements.

To narrow the gap, labor and management have been holding official negotiations twice a week and, since September 30, have also conducted daily working-level talks. A Hanwha Ocean official commented, "The decision for the working-level teams to meet daily reflects both sides' intention to reach a swift conclusion."

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