The Korea Enterprises Federation (KEF) said distributions tied to operating profit and management decisions by corporations, such as building new plants, should be excluded from the scope of labor disputes. It also said mega special zones need stronger labor flexibility, including easing rules on working hours and employment.
KEF released on the 17th a proposal titled "Management community's recommendations on recent labor issues" that included these arguments.
Through the proposal, KEF interpreted that demands for profit-linked bonuses do not fall under matters related to working conditions or business management decisions that affect working conditions, so they cannot be subjects of collective bargaining, and strikes for that purpose would likely not be considered justified.
According to KEF, labor standards laws and regulations do not define performance bonuses as a working condition, and the Supreme Court denied their wage nature on the grounds that they are not closely related to working conditions and are closer to ex post distribution of management performance. KEF also argued that they do not correspond to welfare items such as meal and transportation allowances, or to holidays, discipline, or other treatment.
KEF said major countries overseas also rarely see labor and management agree to fix a certain percentage of operating profit as a performance bonus. In the United States, performance pay is differentiated by individual performance, and for big tech corporations, a compensation committee under the board makes the decision. France operates a statutory profit-sharing system with a legal cap on payments per individual.
KEF warned that if demands to pay performance bonuses tied to operating profit spread across industries, investment and research and development (R&D) would shrink and labor-management conflict could intensify. Accordingly, it urged revising the definition of labor disputes under the Trade Union and Labor Relations Adjustment Act to exclude profit distribution and similar matters from dispute issues, and called on the Ministry of Employment and Labor (MOEL) to clarify through enforcement decrees and rules that these are not subjects of collective bargaining.
KEF also emphasized, regarding the government's semiconductor mega project in the Honam region, that attempts by labor groups to put semiconductor plant construction on the collective bargaining agenda are misguided, saying "establishing a new plant is a highly managerial decision by the management entity and thus also cannot be a subject of collective bargaining." It added that complementary legislation is needed to revise the Trade Union and Labor Relations Adjustment Act to exclude new plant construction from the scope of disputes.
KEF further argued that labor flexibility should be strengthened to enhance the competitiveness of mega special zones. As competitors such as the United States, Japan and China are making working hours and employment types more flexible, it said a foundation for a flexible management environment must also be built for domestic corporations.
Specific measures to be included in the special law on mega special zones were proposed as follows: ▲ expand the unit for managing overtime (currently one week) to monthly, quarterly, semiannual and annual units ▲ exempt research and development, professionals and core startup personnel from working-hour regulations (white-collar exemption) ▲ extend the periods for flexible and selective working-hours systems ▲ extend the permitted period for using fixed-term workers (currently two years) ▲ expand the scope of jobs eligible for dispatch.
Lee Dong-geun, executive vice chair of KEF, said, "In the era of AI and semiconductor transformation, the competition for technological hegemony ultimately comes down to how quickly and flexibly talent can be deployed," adding, "Distributing operating profit and establishing new plants—high-level managerial decisions by corporations—should not become subjects of labor-management conflict, and labor flexibility must underpin mega special zones if they are to become the starting point for fostering national strategic industries."