Samsung Electronics' management negotiator Yeo Myung-koo signs the tentative wage agreement in front of the press at the Ministry of Employment and Labor office in Suwon, Gyeonggi, on May 20. [JOONGANG ILBO]
Samsung Electronics' new wage system, tentatively agreed upon by management and labor on Wednesday, opens the door to sizable bonuses for loss-making divisions within its semiconductor business.
The agreement sets the bonus pool for Samsung's semiconductor division, collectively called Device Solutions (DS), at 10.5 percent of what the two sides have defined as “business performance,” with no cap on the payout rate. Out of the pool, 40 percent will be allotted at the division level — shared equally among all roughly 78,000 DS employees — and 60 percent allocated to individual business units based on performance.
The deal effectively will allow employees in the loss-making contract-chipmaking and chip design units, labeled Foundry and System LSI, to receive substantial bonuses for the first time, ending a standoff that had brought the two sides to the brink of a general strike that would have cost the company upward of 30 trillion won ($20 billion) in losses, according to multiple estimates.
Labor Minister Kim Young-hoon, center, Samsung Electronics' management negotiator Yeo Myung-koo, left, and Choi Seung-ho, right, head of the Samsung Electronics chapter of the Samsung Group United Union, shake hands after signing a tentative wage agreement on May 20 to avert a strike. [YONHAP]
Samsung Electronics had long maintained a strict pay-for-performance framework, tying bonuses to each unit's results and leaving workers in deficit-running units with little to nothing.
The union had originally pushed for 15 percent of annual operating profit as the bonus pool, distributed on a 70-30 split, meaning 70 percent of the bonus pool would be shared equally across all semiconductor division employees, while 30 percent would have been tied to each unit's individual performance.
The final deal shifted that balance to 40-60, seen as the union's concession to management's insistence that the system retain some link to actual results.
Bonuses will be paid entirely in Samsung Electronics treasury shares after tax. One third of the shares can be sold immediately, while the remaining two-thirds are subject to lockup periods of one and two years, respectively.
The rule penalizing loss-making units in bonus payouts takes effect from 2027, meaning Foundry and System LSI employees are entitled to receive substantial sums this year.
People pass by a Samsung store in Gangnam District, southern Seoul, on May 20. [AP/YONHAP]
Using an estimated DS division operating profit of 300 trillion won as a baseline, the total bonus pool would come to roughly 31.5 trillion won. Of that, the 40 percent division-wide share would be split equally among all 78,000 employees, working out to around 161 million won per person. Memory unit employees would receive an additional 455 million won from the unit-level pool, bringing their total estimated payout to around 567 million won. Employees in the Foundry and System LSI units would receive only the division-wide share of around 161 million won.
The deal has unsettled some in the business community. “It is basic management practice to impose penalties on loss-making divisions to drive improvement — paying them large bonuses instead undermines the very principle of performance-based compensation,” one industry source said.
Others worry the agreement could set a precedent that spreads beyond Samsung. Unions at LG U+, Kakao and HD Hyundai Heavy Industries have already included demands for operating profit-linked bonus expansions in their own ongoing negotiations, raising concerns that Wednesday's Samsung deal could embolden labor across corporate Korea.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
댓글
0