The million dollar bonuses got the central bank on its toes – Fear of an inflation bomb

In South Korea, the central bank is concerned about the tech sector and especially the two memory chip giants, Samsung’s and SK Hynixon bonuses paid to employees.

This year, employees are due to be paid a performance-based annual bonus of millions of Korean won, estimated to be up to $500,000. Exact figures are not available, but SK Hynix agreed to pay ten percent of operating profit as bonuses in September 2025 and Samsung to 10.5 percent of the profit bonus after threatening to strike in May.

The central bank fears the bonuses will cause an inflationary spike in a country whose inflation is already high due to rising energy costs caused by the Iran war. The Bank of Korea expects annual inflation to be 2.7 percent in 2026.

Not a normal situation

The central bank announced in its report on June 17 that under normal circumstances, even high bonuses would not sway demand, unless it was a permanent salary increase. However, the report says that when special bonuses increase unexpectedly and significantly, the salary development can spread to other sectors as well.

“Since recent performance bonuses in the IT sector have been paid on an exceptionally large scale, their larger than expected impact cannot be ruled out,” the central bank’s report wrote.

Korean media have reported that luxury consumption has grown enormously, especially in the southern Gyeonggi region, where the headquarters of the memory giants are located.

of the Chosun Ilbo by sales in the trade sector increased by 19 percent in May from a year ago.