Samsung Electronics Co.’s largest union went on strike for the first time in the company’s 55-year history, with a deadlock over wages so severe that both sides halted all discussions.
The Samsung Electronics Union, the tech giant’s largest union with about 28,400 workers, is encouraging members to take a day off on Friday, the day between Thursday’s public holiday and the weekend. They plan to resume regular business hours next week.
“This is a soft start and a symbolic move,” Lee Hyun-kuk, the union’s deputy secretary-general, told Bloomberg News. “But if management refuses to communicate, we plan to conduct a follow-up strike. We do not rule out the possibility of a general strike.
Union leaders gathered in front of a Samsung office building in Seoul on Friday, with one of them speaking to local television. A bus with a large white protest banner was parked at the scene. Placards carried workers’ appeals, but the crowd remained largely silent.
This is in stark contrast to the violent carmaker strikes that have been common in South Korea in the past. In 2009, Ssangyong Motor Co. workers took control of a factory for months, using iron pipes and Molotov cocktails to battle police armed with tear gas and water cannons. head of [hotlink]Hyundai Motor[/hotlink] The union even chopped off part of his pinky finger to express its desire for the most favorable outcome in labor negotiations.
At the heart of the dispute now is bonus payments to Samsung workers. Employees at the company’s semiconductor unit received no such additional payments last year, when the unit lost about 15 trillion won. Union leader Son Woo-mok said they were concerned that bonuses might not be available this year even if the department returns to profitability.
Samsung calculates workers’ bonuses using a complex formula that deducts the cost of capital from operating profits and makes tax adjustments on a cash basis. The union is asking the company to simply use operating profits, as some peers do, or to be more transparent in how it determines those numbers, union leaders said.
Historically, bonuses accounted for a large portion of a worker’s salary. So missing out on that money could mean a significant reduction in compensation.
Kwun Seog Kyeun, a former business school professor at Hankuk University of Foreign Studies, said the focus of the debate is actually whether Samsung will prioritize shareholders’ profits or workers’ contributions.
“The company has been and will continue to negotiate with the union in good faith,” Samsung Electronics said in a statement, adding that production or management activities had not been affected. It also said fewer workers had Friday off than at the same time last year.
Union leaders said it was impossible to count the number of workers taking part in the one-day strike because they were not obliged to report it to the union. Some non-union workers are also enjoying a long weekend, making it more difficult to determine the size of the strike.
In March this year, Samsung’s labor-management meeting agreed to increase wages by 5.1% this year after narrowing differences after multiple rounds of negotiations. The company has historically set pay increases through a committee composed of representatives from both parties. But that agreement was scrapped during recent negotiations because management didn’t agree to their demands for additional paid time off, according to union leaders.
The strike comes as Samsung grapples with a series of challenges. In 2023, its operating profit fell to a 15-year low due to losses in the chip division. Smaller rival SK Hynix has seized a leading position in the suddenly hot market for high-bandwidth memory chips that are critical for training artificial intelligence models.
Samsung, one of the most popular stocks in the country, has seen its shares fall about 1% since the beginning of the year. On average, about one in 10 South Koreans own Samsung stock, although about 1 million frustrated retail investors sold Samsung shares in 2023.
The late Samsung chairman Lee Kun-hee went to great lengths to prevent the union from forming. Lee Jae-yong, who later succeeded his father, apologized in 2020 for “all those who have been harmed on labor issues” and vowed to abandon Samsung’s decades-old “union-free” philosophy.
Analysts believe Samsung’s tight control over labor activism is one of the reasons for its success, while other conglomerates such as Hyundai Motor are regularly challenged by aggressive labor activism in the workplace. Number
Union leaders and analysts believe Friday’s strike will have little impact on Samsung’s chip and electronics production lines.
“The strike will not affect DRAM and NAND Flash production, nor will it cause any shipment shortages,” TrendForce said in a report last week.
