Freezing Salaries
This year, a wage increase of Korean conglomerates’ employees will fall short of the previous year’s. This is because domestic companies are seeking to cut costs due to their poor performance caused by economic uncertainties at home and abroad. Sympathizing such difficulties, their labor unions and employee associations are also reaching an agreement to slightly increase or freeze wages.
According to business industry sources on March 3, Samsung Group’s electronics subsidiaries have agreed to freeze or increase up to 2 percent of basic salaries compared to last year at the wage negotiations this year. By subsidiary, Samsung Electronics and Samsung Display have decided to increase their employees’ basic salaries by 2 percent, and Samsung Electro-Mechanics by 1 percent. In contrast, Samsung SDI will freeze its employees' salaries. Samsung SDS, which is currently in negotiation, is also likely to freeze the wages. The situation is very much the same with its non-electronics subsidiaries. Samsung Engineering presented guidelines for freezing wages and Cheil Worldwide also sent an e-mail to its employees that the company is in poor shape and asking for understanding.
The reduction of wage increases is now spreading around much of the business industry. Hyundai Heavy Industries reached an agreement to freeze its employees’ basic salaries, excluding the increase in pay steps, at the wage negotiation in Dec. last year. Doosan Group froze its employees’ wages in both 2014 and 2015. The group didn’t start wage negotiations yet this year but industry watchers say that it is highly unlikely to increase salaries due to poor performance of its major subsidiaries.
In addition, the union and the management of Korean Air recently agreed on a 1.9 percent wage increase at the wage negotiation last year. Instead of wage negotiations, Hyundai Motor Group fixes its employees’ salaries according to their performance evaluations of the previous year.
According to Korea Employers Federation, the average wage increase last year stood at 5 percent, down 3.2 percent point from the previous year.