The Korea Enterprises Federation (KEF) issued a special recommendation on Wednesday asserting that "the use of corporate profits should be determined and managed based on management decisions, not through negotiations with labor unions." Following the labor-management agreement at Samsung Electronics, union demands for "performance bonuses equivalent to N% of operating profit" have spread across industries, and the government has even raised the issue of "social redistribution of large corporations' excess profits." The KEF has thus drawn a line against preemptive discussions on corporate profit distribution.
In its "Special Recommendation from the Business Community on Union Demands for Corporate Profit Distribution," distributed to member companies that day, the KEF stated that "corporate profits are management resources that should be used for investment, employment, and research and development (R&D)," and made clear that "institutionalizing standards for corporate profit distribution is not a subject for collective bargaining." It also emphasized that "performance bonuses should be operated within a range that does not undermine a company's long-term competitiveness and investment capacity."
Stimulated by the record-breaking performance bonuses in the semiconductor industry, major corporate unions in other sectors are demanding "performance bonuses equivalent to N% of operating profit" as if they were wages they are entitled to receive. The government also appears to be lending weight to corporate profit distribution. Following Presidential Office Policy Chief Kim Yong-beom's proposal of a "national dividend," Employment and Labor Minister Kim Young-hoon stated that "the only solution to how to socially redistribute the excess profits of large corporations is social dialogue," announcing an emergency forum hosted by the Ministry of Employment and Labor. Although the ministry says it has "neither the authority nor the intention to forcibly intervene in corporate profits," this is more than enough to create the misperception that the government is disregarding market economy principles. Given the policy stance tilted toward labor, including the forced legislation of the Yellow Envelope Act, it is also questionable whether the government can open a balanced forum for public discourse.
The purpose of a corporation's existence is to generate profits and maximize shareholder value. If the essence of a corporation is shaken and its existence is threatened, realizing the interests of stakeholders such as workers or social values becomes impossible. Particularly to survive in today's fierce global competitive environment, companies must first remain faithful to their essential nature as corporations. This is likely why Industry Minister Kim Jung-kwan stressed that "this is a critical moment when profits must be channeled into 'productive reinvestment.'" The Samsung Electronics union dispute has clearly demonstrated the need for social discussion on corporate profit distribution. However, one fundamental premise must not be shaken. How to use corporate profits belongs to the domain of management decisions. The government must guard against hasty intervention and respect the inherent management judgment of corporations.
