Retroactive Payments
The major affiliates of Korea’s largest business group Samsung reportedly decided to waive retroactive payments.
Amid a recent upsurge of interest in ordinary wages, the industry is paying attention to how Samsung Group’s decision will affect the industry. Many think that Samsung’s move is more likely to play an important role for the handling of ordinary wages.
According to sources in business circles and the chemical industry on March 10, the labor and management of and Samsung Engineering and Samsung Group’s major chemical affiliates such as Samsung BP Chemicals, Samsung Petrochemical, and Samsung Total Petrochemicals made a decision to forgo the three years increase in wages resulting from retroactive payments at the table for this year’s wage negotiations.
Given the Supreme Court ruling that includes regular bonuses in the ordinary wage issued on December 18 of last year, Samsung employees were entitled to demand retroactive payments for the last three years through labor-management consultation bodies, but decided not to. The decision is attributable to the possibility that retroactive payments will undermine profitability, and thus have a negative impact on future wage negotiations.
This move is also observed in Samsung’s technological arms such as Samsung Electronics, Samsung Electro-Mechanics, and Samsung SDI. Samsung Electronics is planning to waive retroactive payments and to include regular bonuses in ordinary wages. Other electronics affiliates have yet to reach an agreement, but they are expected to follow suit.
Unlike other Samsung subsidiaries, the management and unions of Samsung Heavy Industries and Samsung Fine Chemicals are reportedly still negotiating over ordinary wage payments or pursuing a legal action.
Meanwhile, other major business groups such as Hyundai Motor Group, SK, and LG are working to establish measures related to retroactive pay. The labor union of Hyundai Motor decided to demand the expanded scope of ordinary wages in this year’s negotiations for wages and collective bargaining agreements. The labor union is planning to demand that the company raise wages as much as 159,614 won (US$149.88), and include regular bonuses and fringe benefits in ordinary wages.