Doosan Enerbility demands cap improvement and HD Hyundai Electric revises bonus formula as shipbuilders face rising demands on performance bonus
Labor and management at HD Hyundai Heavy Industries held a kickoff meeting for this year’s wage negotiations on May 20, 2025. (Photo provided by the Hyundai Heavy Industries Branch of the Korean Metal Workers’ Union)
The performance bonus dispute that erupted in the semiconductor industry, including Samsung Electronics, is spreading across the so-called heavy industries such as shipbuilding, power equipment, and heavy industry. While company performances are improving as industry conditions sharply rebound, employees are stepping up to demand improvements, claiming that compensation is limited compared to their performance.
According to the industry on May 20, the Doosan Enerbility Branch of the Gyeongnam Regional Branch of the Korean Metal Workers’ Union decided to demand a basic wage increase of 149,600 won (approximately $99.73) per month (approximately a 5.1% level based on the average wage of union members, excluding regular and seniority-based step increments) through the 2026 collective bargaining agreement demands. The proposed amendments to the collective agreement included revisions to clauses related to retirement age and long-service allowances, and newly proposed demands contained matters regarding union activities and employment of non-regular workers, joining an employers’ organization, and the recognition of the principal contractor’s employer status.
In particular, the labor union presented ‘improvement of the performance bonus payment method’ separated as an independent demand in this proposal. Typically, the wage increase rate or collective agreement amendments are the focus of collective bargaining, but the union put forward the improvement of the calculation method for performance bonuses, which currently have a cap, as a separate demand. In addition, the separate demands included labor human rights and employment protection upon the introduction of AI, abolition of the peak wage system, and an increase in the seniority-based step increment amount. A company official said, “We held the kickoff meeting for the collective bargaining agreement on May 14, and we have received the demands from the labor union.”
The industry views this as part of a trend where issues regarding performance bonus payment criteria and calculation methods are consecutively being raised across the manufacturing sector. In particular, the analysis is that the expectations for performance compensation are changing in industries that have entered a super-boom phase after passing through a long-term recession. For instance, the performance bonus issue continues to be a topic of discussion in the power equipment industry, which recently entered a ‘super cycle’ driven by the expansion of artificial intelligence data centers and the demand for replacing the United States power grid.
First, HD Hyundai Electric paid performance bonuses at a level of 1,195% of the contracted wage (basic wage plus fixed allowance) to employees at the senior level or below early this year, recording the highest payment rate among HD Hyundai affiliates. However, for employees at the manager level and above, a cap of 1000% of the basic wage was applied, leading to complaints from some quarters. At the time, the labor union argued that the calculated payment rate for the manager level was at the 1707% level, but the excess 707% was not reflected due to the cap system.
Amidst this, it was confirmed that the company has set out to overhaul its performance bonus system. Starting this year, HD Hyundai Electric decided to change the performance bonus calculation method to be based on ‘real annual salary’ rather than ‘basic wage,’ applying an upgraded payment standard. Furthermore, the plan is to pay special incentives if there are exceptional management performances. The industry interprets that the company has initiated the flexibilization of the compensation system as the controversy over the performance bonus cap continued.
Among major power equipment companies, Hyosung Heavy Industries also reportedly paid performance bonuses at a level of up to the 300% range of the monthly salary to employees in the Power Performance Unit business division, which handles the transformer business, in February. Although it was pointed out that the payment ratio might be low compared to competitors even though it is the business division that drove the company’s profitability, the company’s position is that this was the highest-grade performance bonus received and the actual amount level is not significantly different from that of competitors.
However, as the power equipment market has entered a super-boom phase, discussions on the performance bonus cap seem unavoidable. Additionally, it is reported that the Hyosung Group overall has recently taken measures to adjust the performance bonus payment rate upward for office workers. In the case of LS Electric, no cap is placed within the total performance bonus financial resources, so the performance bonuses paid early this year were at a level of approximately 1180% of the recent base salary, and it is known that some employees received up to 2600%.
The situation is similar in the shipbuilding industry. Domestic shipbuilders are seeing rapid performance improvements driven by orders centered on high-value-added ships, and the labor unions’ demands for performance bonuses are also intensifying. The Hyundai Heavy Industries Branch of the Korean Metal Workers’ Union also included ‘sharing at least 30% of operating profit as performance’ in this year’s collective bargaining demands. Demands for a basic wage increase of 149,600 won and a 100% increase in bonuses were also included. Labor and management are expected to hold a kickoff meeting in early June and enter full-scale negotiations.
HD Hyundai Heavy Industries’ consolidated operating profit last year was 2 trillion 37.5 billion won. By a simple calculation based on this, the financial resources for performance distribution according to the labor union’s demand exceed 600 billion won. The labor union expects the operating profit scale this year to be in the 3.6 trillion won range, in which case the performance distribution scale could exceed 1 trillion won. The in-house subcontracting labor union is also demanding the payment of performance bonuses at the same level as the principal contractor.
The Hanwha Ocean labor union is also reportedly demanding an improvement in the performance bonus payment criteria along with a basic wage increase. Previously, Hanwha Ocean concluded the collective bargaining agreement relatively quickly last year by paying an equal 400% performance bonus to principal contractor and subcontractor workers, but observations suggest the atmosphere could be different this year. In particular, not only principal contractor-dependent subcontractors but also outside subcontracting labor unions, such as catering companies, are recently demanding participation in negotiations, creating an atmosphere where the burden on the company side is growing.
The industry believes there is a high possibility that the performance bonus dispute will continue for the time being as heavy industry sectors enter a boom phase after a long-term recession. If basic wage increases were the core of labor-management negotiations in the past, the key issue now is how much of the performance results to share together. An industry official said, “Even though heavy industry sectors have different business structures and profit volatility compared to the semiconductor industry, the high performance bonus levels of semiconductor companies are being accepted as a sort of benchmark, making it increasingly difficult to reconcile the gap in expectations between labor and management.”
Jung Min-hee
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