Korea Enterprises Federation argued that the distribution of profits by corporations falls under management judgment and should not be a subject of collective bargaining by labor unions.

After concluding wage talks for Samsung Electronics at the Gyeonggi Employment and Labor Office in Jangan-gu, Suwon, on the 20th, Ye Myung-gu, People Team Head for Samsung Electronics DS (Device Solutions; in charge of the semiconductor business), and Choi Seung-ho, Chairperson of the Samsung Group Supra-Enterprise Labor Union Samsung Electronics Branch, shake hands. /Courtesy of News1

KEF on the 31st announced this position through a "special management advisory on labor unions' demands to distribute corporations' profits," distributed to member companies.

KEF said, "Recently, some labor unions at large corporations are demanding that a system be codified through collective agreements to distribute a set percentage of operating profit to union members," and noted, "These union demands are entirely different in nature from existing performance-based pay systems and are calling for the direct distribution of corporations' profits."

It added, "Corporations' profits are a management resource that should be used for investment, employment, research and development, and improving financial structure to ensure sustainability and future competitiveness," and emphasized, "Unions' demands for the preemptive distribution of corporations' profits could result in restricting shareholders' rights."

It also added, "In practice, even among overseas global corporations, it is hard to find cases where a system is established in advance to agree to distribute a set percentage of profits to workers."

KEF advised member companies to "make it clear that money of a distributive nature based on management results, such as corporations' operating profit, does not constitute wages." It cited as grounds the Supreme Court's consistent rulings that distributions determined according to management performance do not fall within the category of wages.

KEF reiterated, "Institutionalizing standards for distributing corporations' profits belongs to corporations' inherent management judgment and must be made clear that it cannot be a subject of collective bargaining." It also advised, "Performance-based pay should be operated within a scope that does not undermine corporations' long-term competitiveness and investment capacity," and "Decisions should comprehensively consider mid- to long-term investment plans, profits, and corporate liquidity."

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