Samsung union strikes for the first time over salary and bonus disputes

The largest union at Samsung Electronics has gone on strike for the first time in the company’s 55-year history, with the standoff over wages so severe that the two sides have stopped all discussions.

The National Samsung Electronics Union, the largest of the tech giant’s unions with about 28,400 workers, encouraged members to take a day off on Friday, which falls in the middle of the Thursday holiday. and weekends. They plan to resume normal business hours next week.

“This is a gentle start and a symbolic move,” Lee Hyun-kuk, deputy general secretary of the union, told Bloomberg News. “But we have plans for further strikes if management refuses to communicate. We do not rule out the possibility of a general strike.”

Union leaders gathered Friday in front of Samsung’s office building in Seoul, including one who spoke to a local TV station. A bus displaying a giant white protest banner was parked at the site. Placards carried the workers’ calls, but the crowd was largely silent.

That contrasts with the violent strikes that have often occurred at automakers in South Korea in the past. In 2009, workers at Ssangyong Motor Co. controlled a factory for months, using iron pipes and Molotov cocktails against police armed with tear gas and water cannons. The head of [hotlink]Hyundai cars[/hotlink] Labor unions even cut pinky finger to express the desire to achieve the most beneficial results in labor management negotiations.

The focus of the current dispute is Samsung’s employee bonuses. Workers in the company’s semiconductor division did not receive such additional payments last year, when the unit lost about 15 trillion won. They fear they may not receive bonuses again this year even if the division returns to profitability, union leader Son Woo-mok said.

Samsung calculates employee bonuses using a complex formula that deducts capital expenditures from operating profits, adjusted for taxes on a cash basis. According to union leaders, the union is demanding that the company simply use operating profits like some of its peers or be much more transparent in how those numbers are determined.

Historically, bonuses made up a significant portion of workers’ salaries. So missing out on such an amount could mean a significant reduction in compensation.

According to Kwun Seog Kyeun, an analyst, the real dispute lies in whether Samsung will prioritize shareholder profits or employee contributions. former business school professor at Hankuk University of Foreign Studies.

“The company has been and will continue to be in good faith in negotiations with the union,” Samsung Electronics said in a statement, adding that there was no impact on production or management. physical. It also said fewer workers walked off the job on Friday than on the equivalent day last year.

Union leaders said it would be impossible to count the number of workers participating in a one-day strike because they are not obliged to report it to the union. Some non-union employees are also taking the long weekend off, making it even more difficult to determine the scale of the strike.

In March, Samsung’s labor management board agreed to raise this year’s wages by 5.1% after narrowing differences through several rounds of negotiations. The company has previously set salary increases through a committee made up of representatives from both sides. However, the deal was abandoned in the most recent negotiations because management did not agree to the extra day of paid leave they requested, according to union leaders.

The strike comes as Samsung is grappling with a series of challenges. In 2023, the company’s operating profit fell to a 15-year low due to losses in its chip division. Smaller rival SK Hynix Inc. has gained a leading position in the suddenly hot market for high-bandwidth memory chips needed for training artificial intelligence models.

The share price of Samsung, one of the most popular stocks in the country, has fallen about 1% since the beginning of the year. On average, about 1 in 10 South Koreans own Samsung stock, although about 1 million disappointed retail investors sold off Samsung shares in 2023.

Lee Kun Hee, the late chairman of Samsung, made every effort to prevent the establishment of a union. Jay Y. Lee, who later succeeded his father, apologized in 2020 for “all those hurt in labor issues” and vowed to abandon the “no union” philosophy by dozens of people. five years old of Samsung.

Analysts cite Samsung’s tight control of labor practices as one reason for its success while other corporations, such as Hyundai, are often challenged by militant labor practices in the workplace their. ​

Union leaders and analysts see little impact on Samsung’s chip and electronics production lines from Friday’s strike.

“This strike will not impact DRAM and NAND Flash production nor cause any shipment shortages,” TrendForce said in a report last week.

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