S. Korea's Labor Minister Calls on Tech Giants to Share Windfall Profits from AI Boom

(CNA Seoul, 5th, Comprehensive Foreign News) South Korean Labor Minister Kim Young-hoon has called on the country's major tech companies to share their massive windfall profits, warning that the unprecedented earnings in the chip industry driven by the artificial intelligence (AI) boom risk widening inequality gaps.

In an interview with Reuters, Kim Young-hoon said that companies like Samsung Electronics that exceed profit targets should consider sharing their surplus earnings after taxes with suppliers, subcontractors, and their employees, given their contribution to the company's growth.

He stated that the South Korean government, businesses, unions, and suppliers should engage in open dialogue on how to share such 'excess profits' and how to narrow the gap between large conglomerates and smaller suppliers.

Kim, a former labor activist appointed by left-leaning South Korean President Lee Jae-myung, helped facilitate a last-minute wage agreement between Samsung and its union, averting a major strike and bringing hefty bonuses to its memory chip workers.

In his first foreign media interview since the Samsung agreement, Kim's proposed distribution plan reflects that South Korean high-level policymakers are considering some unusual ideas as they grapple with the massive windfall from the global AI boom.

Kim pointed out, "We should establish new distribution rules through social dialogue... It is undeniable that Samsung's outstanding achievements are the result of the joint efforts of labor and management."

"But there are also 1,700 suppliers, as well as contributions from the local community, including the supply of water and electricity."

As the increased use of AI drives demand for memory chips, profits for Samsung and its rival SK Hynix have soared.

Samsung has agreed to give employees special bonuses if it achieves an annual operating profit of over 200 trillion won (approximately NT$4.5 trillion) between 2026 and 2028.

However, Kim has faced criticism from South Korea's conservative opposition People Power Party (PPP), which said he had proposed a "dangerous idea of state intervention that undermines the foundation of a free market economy."

The South Korean presidential office did not respond to requests for comment on the reports. The presidential office had previously stated that Kim's remarks raised important questions for the nation and welcomed the idea of opening a debate.

A senior South Korean policymaker last month also suggested using excess tax revenue from AI profits to pay 'dividends' to citizens.

Samsung and SK Hynix declined to comment.

Kim refuted the PPP's claims that his proposal was equivalent to 'communism,' saying it would represent reinvestment in the supply chain, enhance competitiveness, and help South Korea overcome the challenge of low growth.

Kim noted that adjusting contract prices for suppliers could be one of the ideas for future discussions.

He said these profits could be used to invest in talent at smaller suppliers. Due to factors like wage gaps, benefits, and others, South Korean job seekers prefer large conglomerates like Samsung over smaller companies.

Kim said, "As employees of large companies receive hefty performance bonuses fueled by the AI boom, this gap is expected to widen... This is concerning." (Editor: Li Peishan) 1150605