A beautiful collaboration

SK Hynix has set a refreshing precedent in arrangements between large manufacturers and parts suppliers by pledging to share some of its wage increase with subcontracted workers. The world’s second-largest memory chipmaker said its labor union and management agreed to use 20 percent of this year’s bump in salary - 10 percent from the employee payroll and 10 percent from the company - to help improve wages and welfare programs for workers at its parts suppliers.

There had been cases in which manufacturers share some of their extraordinary profit during a good year with subcontractors, but never has a large conglomerate offered to wage-share with workers in other companies. It cannot be easy for an employee to set aside a portion in its payroll for others. We applaud the union’s generous and brave gesture. About 4,000 employees who work for the company’s partner suppliers could benefit from the arrangement.

The union for SK Hynix’s production lines in Incheon and Cheongju said company workers had a tough time, but that it would be tougher for workers in smaller companies. About 82 percent of those in the union voted in favor of the salary-sharing plan. Union workers said they were proud of the decision and could understand sharing some of the increase in payroll with colleagues elsewhere who are working on the same product and brand.

SK Hynix said it will continue to provide funding each year to partner companies tantamount to this year’s 6 billion won ($5.36 million). The union already agreed last year to extend the retirement age and implement a peak wage system to share the management’s burden in increased labor costs. It sets a good model to other unions at large companies that rigorously cling to their vested interests and vehemently protest any move that could undermine their share and compensation.

According to the Korea Labor Institute, workers at small and midsize companies receive just 56 percent of what their counterparts at large companies earn. The wages of the non-regular work force at smaller companies get just 40 percent of the earnings of workers at large companies.

The income gap between the regular and non-regular work force is ever-widening because unions at large manufacturers oppose any changes to their pay or working conditions. If the permanent work force of large companies does not yield, the disparities in the labor market cannot ease. We hope there will be more like the workers at SK Hynix to help ease income inequality.

JoongAng Ilbo, June 10, Page 30