South Korean company LG Innotek (011070.KS) has officially launched its first office worker union, further intensifying labor-management tensions that have been brewing since earlier this year due to disagreements over performance bonuses. The establishment of the new union, following the launch of a production worker union, is expected to bring labor relations to the forefront of key management issues.

According to sources within the electronics industry on the 17th, the "Communication and Empathy Office Workers' Union" was formed earlier this month, marking the second union at LG Innotek. The first, representing production workers, currently has 5,365 members, accounting for 51% of all employees. As production staff make up roughly half of LG Innotek’s workforce, there is growing interest in how many office workers will eventually join the newly established union.

While the formation of unions is a legal right, it presents management with significant challenges. Tensions between LG Innotek’s management and employees already surfaced earlier this year due to disputes over bonus payouts. In January, the company set employee performance bonuses at 240% of base salary, sparking backlash. Last year, bonuses amounted to 705% of base salary, and this sharp reduction fueled further discord, leading to broader debates about the bonus calculation method. The union even staged a protest in Seoul for the first time in 35 years, demanding a revision of the bonus system.

Furthermore, a challenging business environment could complicate labor relations. Recovery in demand for IT devices remains sluggish, and sales of LG Innotek’s key product, camera modules, have been impacted by lower-than-expected demand for Apple's latest iPhone 16 series. NH Securities has forecasted LG Innotek’s third-quarter operating profit to fall below market expectations, projecting 235.6 billion KRW.