South Korea · Iran · Samsung · CNBC Technology
Large bonuses for South Korea's chip workers puts central bank on inflation alert
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Few workers can say that their bonuses have been so large that the country's central bank takes notice.
Key facts
- According to an unidentified union source cited by Reuters, a memory chip worker with a base salary of 80 million won ($52,400) is expected to receive a total bonus of around 626 million won
- SK Hynix employees are expected to receive bonuses of more than 700 million won ($454,851) if the firm achieves an annual profit of 250 trillion won this year, calculations
- Hyundai Department Store shares are up 120% year to date, with a whopping 113% gain in the last three months, while Shinsegae has led the pack with a 190% gain in share price from the start
- Luxury sales in a Shinsegae department store branch in Gyeonggi province rose by 53.6% year-on-year, the newspaper reported in May, with luxury jewelry surging by 146.3% and luxury watches growing
Summary
But in South Korea, that phenomenon is playing out as workers from tech industries receive bonuses worth millions of won, prompting the Bank of Korea to warn of the upward pressure to inflation. In a June 17 report, the central bank wrote that inflation this year has been largely powered by energy price increases due to the Iran war. More notably, the BOK said that the payment of large performance bonuses recently seen at some major companies in the IT sector could spread into broader wage increases, translating to upward pressure on inflation. This comes as South Korea is already experiencing above-target inflation, with the BOK projecting that full year inflation will come in at 2.7%, above its 2% target.