In an unprecedented move, the largest union at Samsung Electronics Co. has initiated a strike, marking the first time in the company’s 55-year history. The dispute over pay has become so entrenched that both sides have ceased all discussions.
The National Samsung Electronics Union, which represents around 28,400 workers and is the largest among the tech giant’s various unions, has urged its members to take a single day off on Friday, strategically placed between a Thursday public holiday and the weekend. They intend to return to their regular work hours next week.
While this initial strike is considered a soft start and symbolically significant, Lee Hyun-kuk, the deputy secretary general of the union, has stated that further strikes are planned if the management continues to refuse communication. The union has not ruled out the possibility of an all-out general strike.
In Seoul on Friday morning, the historic walkout was not evident. Since announcing the strike on May 29, the union has placed a bus with a banner in front of Samsung’s office building. However, there are no planned gatherings or rallies, as stated by the union leaders.
The union leaders mention that it is not feasible to track the number of workers participating in the one-day strike since they are not required to report it to the union. Additionally, the presence of non-unionized employees taking the long weekend further complicates determining the scale of the walkout.
Contrary to the past, when carmakers in South Korea experienced violent walkouts, the situation at Samsung is different. In 2009, workers at Ssangyong Motor Co. resorted to extreme measures, such as using iron pipes and Molotov cocktails, to take control of a plant for several months. The police responded with tear gas and water cannons. In another instance, the head of the Hyundai Motor Labor Union even cut off a part of his finger to demonstrate his determination to achieve favorable outcomes in labor-management negotiations.
However, the situation at Samsung is more peaceful. In March, after several rounds of negotiations, the labor-management council agreed to increase this year’s pay by 5.1%. Nevertheless, the union leaders were not satisfied as management did not agree to their demand for an additional paid day off in the most recent talks.
The current issue revolves around bonus payments, which is causing a debate between Samsung and its union leaders. Samsung uses a complex formula to calculate workers’ bonuses, deducting its cost of capital from operating profit after adjusting for cash-based taxes. The union is urging the company to either simplify the calculation by using only operating profit, as some of its competitors do, or to provide more transparency in how it determines the numbers.
Union leaders are concerned that even if the semiconductor division achieves a significant operating profit in 2024, they may not receive bonus payments for the second year in a row. Last year, the unit incurred a loss of approximately 15 trillion won.
The crux of the dispute lies in whether Samsung will prioritize profits for shareholders or recognize the contributions made by its workers, as explained by Kwun Seog Kyeun, a former business school professor at Hankuk University of Foreign Studies.
Samsung is facing a series of challenges, including a strike by its workers. The company’s operating profit in 2023 reached a 15-year low due to losses in its chip division. Competitor SK Hynix Inc. has gained an advantage in the high-bandwidth memory chip market, which is crucial for AI training. Additionally, Samsung’s share price has dropped by approximately 1% since the beginning of the year.
The strike is significant as Samsung is a national stock, with about one in 10 South Koreans owning a Samsung share. In 2023, around 1 million retail investors frustrated with the company’s performance sold their Samsung stock.
Under the late chairman Lee Kun Hee, Samsung had actively opposed the formation of unions. However, Jay Y. Lee, who succeeded his father, has apologized for the issues faced by laborers and pledged to abandon Samsung’s long-standing “no union” philosophy.
As per analysts, Samsung’s ability to effectively manage labor activism has played a significant role in its success. In contrast, other conglomerates, such as Hyundai, have frequently faced challenges due to militant labor activism at their work sites.
Union leaders and analysts believe that Friday’s strike will have minimal impact on Samsung’s production of chips and electronics. A recent report by TrendForce stated that the strike will not affect the production of DRAM and NAND Flash, nor will it lead to any shortage in shipments.