Kim Young-hoon says sharing AI windfall profits with suppliers is 'reinvestment, not communism'

Minister of Employment and Labor Kim Young-hoon reiterated his call for large conglomerates to share windfall profits from AI and other advanced industries with their suppliers. He offered contract price adjustments as a concrete mechanism, sharpening a proposal that has drawn sharp criticism in recent weeks.

In an interview with Reuters published Thursday, Kim said it was time to establish new rules for profit distribution through social dialogue.

Using Samsung Electronics as an example, Kim acknowledged that the company's remarkable results stem from the dedicated efforts of both management and labor, but said the picture is broader. "There are some 17,000 supplier companies, and there are also contributions from local communities — including water and power supply," he said.

Kim directly rebuffed criticism from some political circles that his proposal amounted to communism. "What I am talking about is sharing profits with suppliers," he said. "This is clearly reinvestment."

He specifically proposed adjusting contract unit prices with suppliers as one form of social distribution, arguing that trading structures should be reformed so that suppliers receive a share of the gains when a prime contractor posts strong earnings.

On the recent controversy over Samsung Electronics' performance bonuses, Kim warned of a widening gap between large corporations and small and medium-sized enterprises. "There are side effects that come with bonus polarization," he said, adding that expanding bonus payouts tied to windfall profits at large companies could deepen young workers' preference for conglomerate employment, worsen labor shortages at smaller firms and widen social inequality.

Kim was careful to say he was not opposed to rewarding performance itself. "Compensation for short-term results should absolutely exist," he said, "but companies also need to invest in and motivate strategic talent over the medium and long term."

Earlier, on May 27, Kim announced plans for the Ministry of Employment and Labor to host a forum on a "Korean-style social solidarity wage," saying social dialogue was "the only solution" to the question of how to distribute large companies' windfall profits. However, the announcement drew criticism from the business community and opposition parties, who argued it ran counter to free-market principles. Voices of caution also emerged within the government's own economic team, leaving the forum postponed.