The Bank of Korea (BOK) said on the 17th that large performance bonuses paid to employees by semiconductor IT giants such as Samsung Electronics and SK hynix lifted nominal wages in the first quarter by 1.3 percentage points. First-quarter nominal wages rose 3.4% from a year earlier. About one-third of the increase came from the hefty performance bonuses at semiconductor conglomerates, it said.
The Bank of Korea (BOK) released a report titled "Assessing the inflation pass-through potential of wage increases in some IT industries" on the 17th. The Bank of Korea (BOK) said, "Recent performance bonuses in the IT sector are unusually high compared with the past," adding, "The first-quarter contribution (1.3 percentage points) ranks in the top 3% over the past 10-plus years." It added, "At the beginning of next year the contribution could reach an unprecedented level exceeding the top 1%."
The Bank of Korea (BOK) said that when performance bonuses at IT corporations rise sharply, wages in other industries also climb significantly. When the contribution of IT corporations' performance bonuses to nominal wages is high enough to be in the top 10%, there is an observed effect of fixed wages in other industries rising by 0.02 percentage points to 0.3 percentage points.
The Bank of Korea (BOK) said, "The performance-linked compensation systems introduced by some corporations last year have spread to other IT corporations, and recently similar demands have been spreading in non-IT institutional sectors as well." It added, "As upward adjustments to reference wages spread, this suggests that wage pressures could increase across the economy."
The Bank of Korea (BOK) said this situation is increasing upward pressure on consumer prices. The Bank of Korea (BOK) said, "When more enterprises pay special bonuses at average historical levels, consumer prices did not respond significantly, but when more enterprises pay special bonuses at high levels, consumer prices rose significantly." It added, "If some large corporations in the IT institutional sector pay sizable performance bonuses next year, it could become a factor that increases upward pressure on prices going forward."