The debate over bonus distribution sparked by labor and management at Samsung Electronics is spreading to the shipbuilding industry. As the recovery in shipbuilding drives a full-fledged improvement in earnings at major shipbuilders, unions have begun including demands to allocate a set percentage of operating profit as bonuses in their wage and collective bargaining proposals.
According to the shipbuilding industry on the 14th, the labor union at HD Hyundai Heavy Industries included "sharing 30% of operating profit" as bonuses in this year's wage and collective bargaining demands. This is the first time the union has proposed a specific percentage of operating profit as the source of bonuses. Previously, the main demands were fixed increases in base pay or expanded bonuses, but this year the union raised the bar by directly linking company performance and bonuses.
Along with the demand to allocate 30% of operating profit as bonuses, the HD Hyundai Heavy Industries union also included in its proposal a 149,600 won increase in monthly base pay, a 100% increase in bonuses, and 2 billion won in grants for operating expenses to maintain resort facilities. At the level of the Shipbuilding Industry Union Solidarity, the plan is to demand that when the company introduces artificial intelligence (AI) technology into processes, it agree with the union to prepare job security measures. The union is expected to deliver these demands to management soon and hold a kickoff meeting for talks next month.
The industry believes the demands at HD Hyundai Heavy Industries, Korea's largest shipbuilder, could influence wage and collective bargaining at other shipbuilders. As the bonus distribution debate that began in semiconductors spreads across sectors with improving earnings, observers say a full-fledged tug-of-war between labor and management over bonus calculation standards is likely in shipbuilding as well.
In business circles, some say caution is needed about fixing a set percentage of operating profit as the source of bonuses. Because Korea's manufacturing sector has a high share of tangible assets and a structure with heavy annual depreciation and reinvestment burdens, operating profit is not easily viewed as cash immediately available for distribution.
A business community official said, "Operating profit is not cash that piles up in the company's account as is; it is an accounting profit that reflects depreciation and future investment burdens," adding, "If you fix the bonus ratio based on this in shipbuilding, which is a contract-winning industry, gaps could widen between the timing of revenue recognition and actual cash flow and investment plans."
The shipbuilding industry's unique earnings structure is also a factor. After taking ship orders, shipbuilders typically have a two- to three-year lag before actual sales and profits are reflected, and results are highly volatile depending on the global ordering environment and ship price trends. Even if the recent improvement in performance has become clear, fixing bonus distribution rates based on short-term profits could increase the expense burden during downturns, fueling such concerns.
A shipbuilding industry official said, "Shipbuilding requires continuous investment in shipbuilding facilities, eco-friendly ship technologies, and research and development," adding, "Discussions on sharing performance should consider not only short-term results but also medium- to long-term investment capacity and industry volatility."
The bonus debate could spread to other shipbuilders. Hanwha Ocean has said it paid bonuses at the same rate to both primary and subcontracted workers last year, so discussions could continue this year over the criteria for calculating bonuses and the scope of payment. In addition, as the Gyeongnam Regional Labor Relations Commission upheld an objection to the bargaining notice from the union of Hanwha Ocean's catering contractor, there are expectations that conflicts could intensify over how far to define the recipients of bonus payments.