Members of a Samsung Electronics labor union hold a large-scale rally near the company’s Pyeongtaek campus in Gyeonggi on the afternoon of April 23. [JOONGANG ILBO]
Samsung Electronics and its union reportedly remain deadlocked in ongoing government-mediated talks on Tuesday, raising the prospect of a general strike that industry sources warn could cause up to 30 trillion won ($20.1 billion) in losses.
"We talked things through together, but our positions have not narrowed," Choi Seung-ho, head of the Samsung Electronics chapter of the Samsung Group United Union (SGUU), told reporters Tuesday evening. "If the National Labor Relations Commission does not present a mediation proposal by 8:20 p.m. today, we will walk out of the negotiations."
The SGUU, the majority union of the electronics giant, met with management for a second post-mediation session at the commission's office in Sejong from 10 a.m. The session followed an 11-and-a-half-hour marathon negotiation the previous day that also ended without an agreement.
At the heart of the dispute is the union's demand to institutionalize a fixed bonus formula tied to operating profit. Specifically, the union is demanding that 15 percent of the operating profit from Samsung's Device Solutions (DS) division — which oversees the semiconductor business — be set aside as a fixed bonus pool and that the 50 percent salary cap on the excess profit incentive be abolished.
Samsung management has countered with a more flexible proposal: maintaining the cap while offering special bonuses to the memory division exceeding competitor levels if it tops the industry in operating profit, and additional bonuses of up to 75 percent for the foundry and System LSI divisions — both currently operating at a loss — if performance improves.
Choi Seung-ho, head of Samsung Electronics' largest labor union, speaks to the press amid ongoing mediations with management in Sejong on May 12. [YONHAP]
Management says its proposal could allow compensation equivalent to roughly 13 percent of the memory division's operating profit, but argues that the union's fixed formula would require paying hundreds of millions of won in bonuses even to loss-making divisions within the DS unit, which it says is inequitable.
The business community is watching closely, viewing the outcome as a potential benchmark for compensation practices across Korean industries. Already, unions at Hyundai Motor, LG U+ and Kakao have made similar demands, seeking profit-linked bonus formulas of 30 percent of net profit and 30 percent and 10 percent of operating profit, respectively.
"Semiconductors are a high-margin specialty sector, while most other industries are in a severe downturn," a senior executive at one of Korea's top 10 conglomerates said. "If Samsung institutionalizes an operating profit-linked model, it could send the wrong signal across the industry and trigger a game of chicken over bonuses.'"
Samsung Electronics' office in Seocho District, southern Seoul, on May 11 [NEWS1]
Critics have also raised concerns about widening inequality. Lee Byoung-hoon, emeritus professor of sociology at Chung-Ang University, warned that the bonus dispute — involving sums worth hundreds of millions of won — would deepen feelings of deprivation among the majority of workers at small- and medium-sized companies, who earn an average of 3.07 million won per month.
"A sustainable bonus formula that includes social responsibility and solidarity is needed," he said.
Legal and economic experts have raised alarms about the long-term impact on corporate competitiveness.
“If companies are legally required to distribute 15 percent of operating profit every year, it would inevitably limit their room to maneuver, given the many variables they must consider, including mergers and acquisitions, reinvestment and defending management control,” Park Ji-soon, a professor at Korea University School of Law, said. “There is a strong possibility that it would significantly constrain companies’ future strategies and investment decisions.”
“The basic principle of the economy is that workers are guaranteed wage stability while capital owners bear the risks. A structure in which only profits are shared while risks are ignored will ultimately undermine entrepreneurship and distort the labor market,” Yang Jun-mo, an economics professor at Catholic University of Korea, said.
If talks collapse entirely, the union is likely to proceed with a general strike on May 21. Industry sources estimate the strike could cause up to 30 trillion won in losses through production disruptions and customer defections.
Major clients including Apple and HP have reportedly already contacted Samsung to inquire about strike contingency plans.
Samsung shareholders on Tuesday gathered near the home of Samsung Electronics Executive Chairman Lee Jae-yong to hold a rally denouncing the potential strike, calling it "a death sentence for the semiconductor industry."
Some are calling on the government to invoke emergency arbitration powers, which would immediately halt the strike and restrict industrial action for one month.
Proponents argue that with semiconductors accounting for 38 percent of Korea's exports, a factory shutdown could inflict significant harm on the wider economy. The emergency arbitration power has been used only four times in Korean history, including during the 1993 Hyundai Motor strike and the 2019 Asiana Airlines pilots' strike.
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.
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