Photo = Yonhap News
LG Electronics decided to raise wages for employees by 9%, including production workers this year. It is the highest rate of increase in the last 10 years. The starting wage for each position was also decided to increase by up to 6 million won. It is interpreted that the wage system reorganization and demands for performance compensation that were raised simultaneously by major companies were taken into account, and that the rate was raised to an unprecedented level compared to the previous year.
LG Electronics and LG Electronics Labor Union announced on the 18th that they have agreed on this year’s wage increase and welfare improvement plans. LG Electronics’ wage increase rate is the highest since 2011 (9%). The highest rate of increase since 2000 was also 9% in 2011 and this year.
Considering that the increase rate for the last three years since 2018 has been around 4% annually, it is more than double compared to the previous year. Last year, the rate of wage increase was 3.8%. A company official said, “We comprehensively considered the fact that major companies are changing the wage system in advance.”
LG Electronics and the labor union explained that they applied the increase rate according to the performance grade last year and also increased the starting salary for each position. The new initial wages for employees, seniority, and responsibility are 46 million won, 55 million won, and 71 million won, respectively. It has increased by 3 million won, 5 million won and 6 million won respectively from the previous year. The new wage table applies from March salary.
LG Display also decided to increase the average of 6.5-7.0% of wages based on skilled workers through a collective agreement on the day. This is also the highest level since the early 2010s.
An official from the economy said, “The demand for wage hikes and performance compensation in the information technology (IT) industry is affecting manufacturing sites as well.
Wage 9%↑, the highest in 10 years… Over 90 million won in average wage
LG Chem and other subsidiaries also raise one after another… Announcement of chain wavelengths in other manufacturing industries
It is complicated that LG Electronics decided on the 18th this year’s wage increase rate to 9%, more than twice the previous year. The superficial reason is that concerns over talent churn have increased as information technology (IT) companies have come up with unprecedented salary increases one after another. It is also interpreted that the’basic wage’ was raised instead of the incentive pay to alleviate the complaints of employees over the incentives announced last month. It can be interpreted that taking into account the launch of a third union centered on office workers in the company.
Up to 6 million won increase in starting salary for each position
It was on the 16th of last month that LG Electronics’ performance compensation system was on the verge of controversy. At the time, LG Electronics paid 750% (37.5% of annual salary) incentives to the major business units of the H&A (Household Appliances) business division, which achieved record-high performance last year.
The problem was other business divisions, such as the MC division in charge of smartphones. As the news that only one million to three million won of encouragement money was paid was announced, some of the employees opposed it in a group.
The controversy over performance pay has led to dissatisfaction with the overall performance compensation system. There has been increasing voices that LG Electronics’ overall wage level is lower than that of its competitors. The union also moved quickly. It is reported that the labor union of production workers demanded an increase in wages of 11.2% prior to the wage negotiations. An industry insider said, “It seems that we have decided that the only way to provoke the minds of employees is to raise wages.”
LG affiliates other than LG Electronics are also raising their employees’ salaries. LG Chem recently reorganized the wage system and significantly increased the starting salary for each position. The starting salary is the first year of promotion to the position, and the new employee is the first year of employment. The annual salary for new employees jumped 6.9% from 43 million won to 46 million won. The starting salaries of senior and responsible employees also increased by 3 million won and 4 million won, respectively.
LG Display also decided to increase the average of 6.5 to 7% of wages based on skilled workers through a collective bargaining agreement. Considering that LG Display recorded a deficit last year, this is an unprecedented wage increase. An official from LG Group said, “It is impossible to prevent the defection of talent with loyalty alone,” and “Several subsidiaries are reviewing ways to elaborate the performance compensation system.”
Expected chain wavelength to other manufacturing sites
The economic world is paying attention to the possibility that the demand for compensation expansion, initiated by major conglomerates and some IT companies, will spread throughout the industry. An economic official said, “In the case of industries that were hit by a new coronavirus infection (Corona 19), financial resources are insufficient even though they want to raise wages.” Said.
With LG Electronics’ unprecedented increase, the demand for wage increases from production workers at large manufacturing companies is expected to become even more intense. With this agreement, the average salary of LG Electronics employees is expected to increase significantly from 86 million won last year to 90 million won. Considering that LG Electronics has 40,000 employees, the labor cost borne by the company is expected to increase significantly from 3.446.3 billion won. The economic world said, “In the past, the unprecedented compensation of IT companies was possible because the actual number of workers was not greater than that of manufacturing companies, but the number of large manufacturing companies that feel burdened by this decision will increase.
Reporter Song Hyung-seok [email protected]