South Korea’s central bank, in a report released June 17, identified large performance bonuses in the information technology sector as a potential source of upward pressure on inflation. The Bank of Korea (BOK) noted the development as it projects the country’s full-year inflation to reach 2.7%, which is above its 2% target.
In its report, the BOK stated that while recent inflation has been driven primarily by energy price increases, income-related factors could contribute to future price pressures. The bank specified that substantial performance bonuses recently paid by major IT companies could lead to broader wage growth, affecting both supply- and demand-side inflation.
The BOK’s report acknowledged that one-time bonuses typically have a limited impact on demand, as they are not permanent income increases. However, it described the recent scale of bonuses in the IT sector as “highly exceptional” and said “the possibility that their actual impact could be larger than expected cannot be ruled out.”
The bank’s observations follow reports of significant bonus payments to employees at semiconductor firms SK Hynix and Samsung Electronics. While the companies did not disclose the exact amounts, wage agreements were previously reported. Last September, SK Hynix agreed to a deal dedicating 10% of its operating profits to employee bonuses. Samsung Electronics reportedly agreed to allocate 10.5% of its semiconductor operating profit for special bonuses after labor negotiations in May.
A Reuters report, citing an unidentified union source, calculated that a memory chip worker with a base salary of 80 million won (approximately $52,400) could receive a total bonus of around 626 million won (approximately $410,000) this year. The same report calculated that SK Hynix employees could receive bonuses exceeding 700 million won (approximately $454,851) if the company’s annual profit projections are met.
Data indicates a corresponding increase in consumer spending in regions with a high concentration of technology workers. BOK Deputy Governor Lee Jiho stated in a June 17 press briefing that “sales have increased significantly in places such as Suwon and luxury goods sections of department stores.”
The central bank’s report noted that credit card spending in Gyeonggi Province—where major Samsung and SK Hynix facilities are located—was higher in areas near chip production sites compared to other regions.
Citing this trend, South Korean media outlet Chosun Ilbo reported in May that luxury sales at a Shinsegae department store branch in Gyeonggi rose 53.6% year-on-year. The report specified a 146.3% increase in luxury jewelry sales and an 85.3% increase for luxury watches over the same period.
In parallel, the stock values of major South Korean department store operators have increased. Year-to-date, shares of Shinsegae have risen by 190%, while Hyundai Department Store shares are up 120% and Lotte Shopping shares have increased by more than 148%.
