Factory Workers Receive Rp 7 Billion Bonus, Immediately Splurge on Luxury Goods

South Korean semiconductor industry workers are currently enjoying fantastic bonuses worth up to billions of rupiah. The sheer size of the incentives received by chip company employees has prompted the Bank of Korea (BOK) to warn about the impact on inflation. In a report released on 17 June, the BOK stated that inflation this year is still heavily influenced by rising energy prices due to the Iran conflict. However, the central bank warned that inflationary pressures could potentially increase even if the conflict subsides, in line with improving public incomes and increasingly widespread wage growth. The BOK specifically highlighted the large performance bonus payments recently made by several major information technology (IT) companies. According to the central bank, this trend has the potential to spread into broader wage increases and drive inflation higher. This warning comes as South Korea continues to face above-target inflation. The BOK forecasts inflation throughout 2026 to reach 2.7%, higher than its official target of 2%. The BOK’s spotlight came after reports of jumbo bonuses received by technology company workers, especially at South Korea’s two chip giants, SK Hynix and Samsung Electronics. Although neither company disclosed the exact value of the bonuses paid, SK Hynix is known to have agreed on a wage deal last September that allocates 10% of the company’s operating profit as a bonus for employees. Meanwhile, Samsung workers reportedly approved a scheme allocating 10.5% of the semiconductor division’s operating profit for a special chip worker bonus. The agreement was reached after the labour union had threatened an 18-day strike in May. Based on union sources, a memory chip worker with a base salary of 80 million won is estimated to receive a total bonus of around 626 million won, equivalent to Rp 7.3 billion, this year. SK Hynix employees are even estimated to receive bonuses exceeding 700 million won if the company manages to achieve an annual profit of 250 trillion won this year. The BOK explained that bonuses typically do not exert significant pressure on demand because they are non-permanent. However, the situation is different when special bonuses are given in very large and unusual amounts. According to the BOK, such conditions can trigger wage increases in other sectors, thereby amplifying inflationary pressures from both the supply and demand sides. ‘In particular, because performance bonuses in the IT sector have recently been paid on a very extraordinary scale, the possibility that the actual impact is larger than expected cannot be ruled out,’ the BOK wrote. Amid the central bank’s concerns, the retail sector is actually profiting thanks to chip workers receiving jumbo bonuses. BOK Deputy Governor Lee Jiho said in a press conference on 17 June that sales have increased significantly in places like Suwon and the luxury goods sections of department stores, and this could gradually spread further. South Korean media reported that some technology industry workers immediately spent their bonuses on luxury goods, including bags, jewellery, and premium watches at shopping centres. The BOK noted that credit card transaction growth in Gyeonggi Province, the location of Samsung Electronics and SK Hynix’s main semiconductor facilities, was higher than in other regions. The increase was particularly visible around chip production areas and employee residential zones. South Korean media outlet Chosun Ilbo reported that luxury goods consumption surged in the southern Gyeonggi region, home to Samsung and SK Hynix. Luxury goods sales at a Shinsegae department store branch in Gyeonggi Province soared 53.6% compared to the previous year. Luxury jewellery sales rocketed 146.3%, while luxury watches rose 85.3%. Overall, the store’s sales grew 19%. The surge in high-end consumption also boosted the shares of South Korean retail companies. Lotte Shopping shares, the retail unit of Lotte Group, soared more than 148% since the start of the year. In the last three months alone, its share price rose about 67%. Meanwhile, Hyundai Department Store shares strengthened 120% year-to-date and jumped 113% in the last three months. Shinsegae was the issuer with the largest increase. The company’s share price rocketed about 190% since the start of the year, including a 107% jump in just the last three months.