(Kakao)
South Korea’s leading information technology (IT) company Kakao Corp. is facing the possibility of its first-ever headquarters strike since its inception.
According to sources from the IT industry on Sunday, the Kakao chapter of the Korean Federation of Chemical and Textile, and Food Workers Unions, or the Kakao Union, halted negotiations with management on Thursday and submitted a mediation request to the Gyeonggi Regional Labor Relations Commission.
The request involved unions from four affiliates, including Kakao, Kakao Pay Corp., Kakao Enterprise Corp., and DK Techin Corp.
This move is interpreted as an effort to build a united front at the group level rather than responding separately by affiliate.
The biggest point of contention between labor and management centered on performance bonuses, sources said.
While these bonuses were typically not subject to labor-management negotiations, the implementation of the so-called Yellow Envelope Act has brought them onto the wage bargaining table.
The Kakao Union is demanding bonuses amounting to 13–15 percent of operating profit, arguing that Kakao should adopt the same compensation formula used by SK hynix Inc., which has posted exceptionally strong earnings, sources said.
Given that Kakao’s standalone operating profit totaled 440 billion won ($301 million) last year, the expected bonus payout would amount to roughly 16 million won per employee.
Industry observers suggest that the Kakao Union is effectively moving toward a strike, as filing for mediation with the regional labor commission is widely regarded as a procedural step toward securing legal strike rights.
The mediation date has been set for May 18.
If the two sides fail to reach an agreement during the 10-day mediation period, the union will gain the legal right to strike.
In June last year, the Kakao Mobility branch staged the company’s first partial strike in protest over failed wage and collective bargaining negotiations, though headquarters employees did not participate.
Some observers are now raising concerns that a strike involving the headquarters could lead to potential service disruptions for KakaoTalk, the country’s leading mobile messenger.
The broader IT industry is closely watching Kakao’s labor negotiations.
If a “10 percent of operating profit” bonus structure becomes established, similar demands could spread across the industry.
In particular, after SK hynix made the unprecedented decision to distribute 10 percent of operating profit as bonuses, similar demands have been spreading throughout organized labor.
Unions at Samsung Electronics Co. have also demanded even higher compensation than that offered by SK hynix and warned of a general strike.
“If Kakao adopts a bonus system equivalent to 10 percent of operating profit, competing firms will have little choice but to introduce similar systems as well in order to attract talent,” noted an IT industry insider.
The business community, meanwhile, is voicing growing concerns over rising bonus demands.
There are fears that mechanically allocating a large portion of operating profit to bonuses could undermine companies’ long-term competitiveness and survival capabilities.
Some executives warn that companies may struggle to secure the massive funding needed for research and development (R&D) and preemptive mergers and acquisitions in the era of artificial intelligence (AI).
“Operating profit is seed money that should be retained for investment in future growth businesses,” said an official from the business circle. “If even the capital for future investment becomes tied up in short-term bonus payouts, companies may ultimately fail to keep pace with the speed of change.”
A Kakao official said that “the company has been in sincere discussions with the union, but the two sides failed to reach a final agreement regarding the detailed compensation structure, leading to the mediation process.”
“We will participate faithfully in the upcoming mediation procedures, keep communication channels with the union open at all times, and strive to achieve an amicable agreement,” the official added.
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