Kakao Labor Dispute Reaches Critical Juncture This Week

Kakao’s labor dispute is reaching a critical juncture this week. A strike could hamper the company’s push into new businesses including artificial intelligence and cloud services.

The Kakao chapter of the Korean Chemical, Textile, Food and Public Workers’ Union will hold a second round of mediation with management at the Gyeonggi Regional Labor Relations Commission at 3 p.m. on May 27, according to the IT industry on May 25. The two sides failed to reach an agreement in their first round of mediation on May 18 and extended the mediation period.

The result of the latest talks will determine whether Kakao and unions at its affiliates can jointly secure the legal right to take collective action. On May 20, the union held a strike authorization vote for members at five entities — Kakao headquarters, Kakao Pay, Kakao Enterprise, DK Techin and XL Games — and the measure passed at all of them. Four of the affiliates have already secured strike rights after mediation was suspended. If the May 27 talks collapse and mediation is also suspended for Kakao headquarters, all five entities will be able to launch legal collective action together.

Labor and management remain at odds over bonuses and whether to include restricted stock units, or RSUs, in performance pay calculations. The union says the company presented opaque standards for employee bonuses despite strong results last year, while paying senior management hefty bonuses. It also opposes management’s plan to count RSUs worth about $3,600 as part of performance pay, arguing the stock awards should be treated as separate compensation.

If the union goes on strike, Kakao’s new business initiatives could face disruptions. The effect on KakaoTalk services is expected to be limited. Much of the platform’s operating system has been automated, and basic services can be maintained with non-union staff.

Heo Jin, Hankyung.com reporter hjin@hankyung.com