Samsung Electronics is bracing for a significant disruption as over 47,000 workers are set to go on strike Thursday, following a breakdown in crucial wage negotiations. The impasse has already sent the South Korean chip giant's shares tumbling by 3%.
The union had initially agreed to a mediation proposal put forth by South Korea's National Labor Relations Commission. However, Samsung Electronics ultimately rejected the proposal, according to the government body. Choi Seung-ho, a spokesperson for the labor union, expressed deep regret, stating that the mediation process was terminated due to delays in the company's decision-making.
Despite the looming strike, the union indicated that efforts to reach a settlement would continue. Samsung Electronics, in a statement, cited that accepting the union's demands, particularly regarding performance bonuses, could undermine fundamental management principles. The company also emphasized its commitment to continued dialogue, asserting that strikes are undesirable under any circumstances.
The core of the dispute lies in the union's demands for performance bonuses equivalent to 15% of Samsung's operating profit, the removal of bonus payout caps, and a more formalized bonus structure. A significant sticking point is the demand to permanently remove the cap, which historically limited bonuses to 50% of a worker's salary. The union argues this prevents employees from fully benefiting from the company's substantial profits.
Adding to the complexity, a South Korean court had previously issued an order restricting the strike's impact, mandating that it must not interfere with safety facilities or obstruct work, particularly concerning sensitive semiconductor wafers. This aims to mitigate potential damage to the company's operations.
The South Korean government, including President Lee Jae Myung and Prime Minister Kim Min-seok, had actively urged both parties to find common ground. Reports suggest that the government may even resort to emergency measures if the disruption escalates, potentially invoking an "emergency adjustment" under South Korean law to suspend industrial action if it poses a significant threat to the economy or public life.
Financial experts like Kamil Dimmich of North of South Capital noted the significant financial implications of the union's demands, highlighting that uncapping bonuses could create a permanent drag on Samsung's profitability. He also pointed out that the union's requested percentage of operating profits exceeds agreements made with rival companies like SK Hynix.
Video: Samsung Electronics workers to go on strike after wage talks break down (2:07)
