South Korea’s tech giant faces growing pressure over compensation, restructuring and job security as workers threaten a full-scale walkout later this month.
Kakao Corp., the South Korean technology company behind the country’s dominant messaging platform KakaoTalk, is confronting a challenge it has never faced before: its first labor strike.
Employees demanding expanded performance bonuses and the conclusion of stalled wage negotiations staged a four-hour partial walkout on Tuesday, escalating tensions between management and labor at a critical moment for the company. The union has also warned that it will launch a full-scale strike on June 29 if an agreement is not reached, raising the prospect of a prolonged labor dispute.
The strike marks a significant turning point for Kakao, long regarded as one of South Korea’s most influential technology companies and a symbol of the country’s digital economy.
According to the Korean Chemical and Textile Workers’ Federation’s Kakao chapter, approximately 1,500 union members from Kakao and several key affiliates—including Kakao Pay, Kakao Enterprise, DK Techin and game developer XL Games—participated in the walkout.
Workers stopped work from 10 a.m. to 3 p.m., excluding a one-hour lunch break. Participants gathered outside Kakao’s Pangyo headquarters before marching roughly two kilometers to a nearby plaza, where they held a rally condemning what they described as growing job insecurity and unfair compensation practices.
At the center of the dispute are disagreements over performance-based pay and concerns about the company’s broader restructuring efforts.
The union is demanding larger bonuses tied to company performance and the conclusion of annual wage negotiations. Labor representatives and management also remain divided over whether restricted stock units, or RSUs, worth approximately 5 million won ($3,600) per employee should be included as part of annual performance compensation.
Industry officials say the two sides have yet to bridge differences over the overall size of bonus payments, which are believed to be linked to roughly 10% of operating profit.
For employees, however, the conflict extends beyond compensation.
Union leaders argue that restructuring initiatives across Kakao’s affiliate network have heightened anxiety over job security. At XL Games, layoffs are currently under consideration. At DK Techin, internal documents disclosed during negotiations reportedly outlined plans involving workforce reductions equivalent to 16% of staff, with a target of cutting 121 positions. Kakao Enterprise has also faced mounting pressure following heavy investment spending and weaker-than-expected business performance, fueling concerns over possible restructuring.
Meanwhile, both DK Techin and Kakao Pay have faced criticism over the operation of performance improvement programs that some employees characterize as systems targeting low-performing workers.
“The people responsible for failed investments worth trillions of won and poor management decisions have not been held accountable,” union leader Seo Seung-wook said during Tuesday’s rally. “Instead, organizations disappear, businesses are shut down and colleagues are forced to leave. Workers are the ones paying the price.”
Seo urged employees to stand together, arguing that “someone else’s job insecurity, restructuring or unequal compensation will eventually become our own problem.”
Shin Hwan-seop, chairman of the Korean Chemical and Textile Workers’ Federation, expressed support for the striking employees, saying that many workers in Pangyo’s technology sector continue to struggle with job insecurity and compensation systems that fail to adequately reward their contributions.
The dispute presents a major test for Kakao Chief Executive Chung Shin-a, who secured a new term earlier this year and has sought to improve efficiency through divestitures and organizational restructuring. At the same time, the company is attempting to strengthen its position in the increasingly competitive artificial-intelligence sector, where domestic rival Naver has been aggressively expanding partnerships and investment initiatives.
Government officials have also been monitoring developments closely because of concerns over the stability of widely used digital services. South Korea’s Ministry of Science and ICT recently met with Kakao to review contingency plans aimed at ensuring uninterrupted operations of core platforms used by millions of consumers.
Although major service disruptions have not materialized, the possibility of a full-scale strike later this month has heightened pressure on both sides to return to the negotiating table.
Whether Kakao and its employees can reach an agreement before June 29 may determine more than the outcome of a single labor dispute. For a company seeking to reinvent itself around artificial intelligence while rebuilding trust with investors, workers and users alike, the negotiations could become an early measure of its ability to navigate one of the most challenging periods in its history.
