Kakao management and its labour union, whose wage agreement talks have broken down, agreed to extend the mediation schedule in proceedings at the Gyeonggi Provincial Labor Relations Commission. The possibility of the company’s first head office strike since its founding has been pushed back for now, but labour-management conflict across the Kakao group is expected to continue as 4 affiliates have already secured the right to take industrial action.

According to the industry on May 19, the Gyeonggi commission held mediation proceedings for Kakao head office wage talks from 4:30 p.m. the previous day. The sides did not reach a final agreement after about 6 hours of talks, but extended the mediation schedule after agreeing to continue discussions.

Under labour union law, the commission’s mediation period for a general business is within 10 days of accepting an application, but can be extended by up to 10 days with agreement by labour and management. A second mediation session was set for 3 p.m. on May 27.

The main issues in the talks are the wage increase rate and the performance bonus compensation structure. The industry has said the union was seeking performance bonuses at about 13 to 15 percent of Kakao’s operating profit last year. The union says the size of the performance bonus itself is not the key reason the talks broke down.

It argues that an operating profit-linked performance bonus was one of several options discussed during consultations and that the dispute is about improving the overall compensation system, including transparency of compensation criteria, the performance distribution structure and rewards for long service. Disagreements between labour and management were also reported to have continued over bonus items that make up the compensation system and the detailed design process.

While the head office extended the mediation schedule, the situation at affiliates was different. The Kakao branch of the Korean Chemical Fiber Food Industry Union, known as Crew Union, applied for mediation at the Gyeonggi commission on May 7 for 5 corporate entities, including Kakao head office, Kakao Pay, Kakao Enterprise, DK Techin and XL Games.

Among them, mediation was suspended for Kakao Enterprise on May 15 and for Kakao Pay on May 14. On May 18, mediation procedures for DK Techin and XL Games were also halted after the sides failed to reach agreement. When a decision to suspend mediation is made, the union gains the right, after a vote by its members, to take industrial action such as a strike or work slowdown. This means 4 of the 5 entities that applied for mediation, excluding the head office, have secured the right to take industrial action.

If Kakao head office’s union launches an actual strike, it would be the first since the company’s founding. At the group level, the Kakao Mobility union staged a partial strike for about a week in June last year, but there has been no head office strike.

A Kakao official said, "The mediation schedule was extended with agreement between labour and management, and the company will continue working toward an amicable agreement."

The union plans to hold a rally at noon on May 20 at Pangyo Station Square in Seongnam, Gyeonggi Province, and announce its response direction and plans for collective action. It is expected to continue steps to pressure management ahead of the second mediation on May 27.