‘Bonus Controversy and IT Talent Recruitment Battle’ SKT to Pay 8 Million KRW Settlement to All Employees for Wage Negotiations (Comprehensive)

[Asia Economy Reporter Eunmo Koo] Following recent controversies over performance bonuses and the intensifying talent acquisition competition in the IT industry, SK Telecom will provide all employees with a wage negotiation settlement payment of 8 million KRW and improve its performance bonus system.

According to the telecommunications industry on the 8th, SK Telecom's labor and management reached a tentative agreement on this year's wage increase after about a month of intensive negotiations and prepared improvement measures for the performance bonus system.

An SK Telecom official explained, "This year's wage increase agreement reflects our commitment to securing top talent and providing the best compensation in the fiercely competitive market across the ICT industry, beyond just the telecommunications sector, to attract the best talent and deliver the highest quality services. The conclusion of this wage negotiation is significant in that it enhanced transparency and predictability by deriving results through a rigorous discussion process based on trust and communication between labor and management with employee participation."

Additionally, it was tentatively agreed to pay all employees 8 million KRW as a wage negotiation settlement payment. This settlement payment is given as compensation because employees' dissatisfaction grew due to performance bonuses being lower than expected. It also appears to reflect the recent domino effect of salary increases in the IT industry, which has intensified competition for talent acquisition.

Previously, the SK Telecom labor union officially raised concerns, stating that despite last year's revenue growing 5.0% year-on-year to 18.6 trillion KRW and operating profit increasing 21.8% to 1.3 trillion KRW, the performance bonuses for last year decreased by about 20% compared to the previous year.

Regarding the problematic performance bonus criteria, SK Telecom labor and management proposed an improvement plan so that individual employees can predict their bonuses. Previously, performance bonuses were excluded from the wage and collective bargaining negotiations because they were not considered part of wages, but due to recent controversies, this time wage negotiations and the performance bonus system were discussed together. The existing performance bonus criterion was EVA (Economic Value Added), but since employees could not know the specific standards, there was a demand for transparency.

Labor and management agreed to divide performance bonuses into TI (Target Incentive) and PS (Profit Sharing), with TI reflecting Key Performance Indicators (KPI) and PS reflecting operating profit for payment.

This improvement will be finalized through procedures such as a union member vote on the 11th and is expected to be applied starting with this year's performance bonuses.