However, the bank also noted that upward pressure on wages have prevailed in certain industries because of productivity improvements, labor market conditions, and the expansion of performance-based compensation.
Addressing the semiconductor industry in particular, the bank wrote that “performance-based bonuses have increased significantly in line with improvements in corporate performance. These income increases may expand household consumption capacity.”
Likewise, Reuters calculated earlier this year that chip workers at [hotlink]SK Hynix[/hotlink] can expect bonuses of more than 700 million won ($454,851) if the firm achieves an annual profit of 250 trillion won.
These income increases (either confirmed or suggested) impact prices in two ways, the Bank of Korea added: “First, through a cost channel, by increasing firms’ production costs, which may be reflected in prices, and second, through a demand channel, via increased consumption resulting from higher household income.
“The magnitude of these effects may vary depending on economic conditions and firms’ pricing environment.”
