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The largest union at Samsung Electronics Co. went on a strike for the first time in the company\u2019s 55-year history, with the standoff over pay so entrenched that the two sides have stopped all discussions.\u00a0<\/p>\n
The National Samsung Electronics Union, the largest of the tech giant\u2019s several unions with some 28,400 workers, encouraged members to take a single day off on Friday, which falls between a Thursday public holiday and the weekend. They plan to resume normal work hours next week.<\/p>\n
\u201cThis is a soft start and a symbolic move,\u201d Lee Hyun-kuk, deputy secretary general of the union told Bloomberg News. \u201cBut we have plans for subsequent strikes if the management refuses to communicate. We are not ruling out an all-out general strike.\u201d<\/p>\n
Union leaders gathered on Friday in front of Samsung\u2019s office building in Seoul, with one speaking to a local television station. A bus draped in an enormous white protest banner was parked at the site. Placards carried worker appeals, but the crowd was largely muted.<\/p>\n
That contrasts with violent walkouts at carmakers that were common in South Korea in the past. In 2009, workers at Ssangyong Motor Co. took control of a plant for months, using iron pipes and Molotov cocktails to battle police armed with tear gas and water cannons. The head of the [hotlink]Hyundai Motor[\/hotlink] Labor Union even\u00a0cut off<\/a>\u00a0part of his little finger to express his will to obtain the most favorable outcome in the labor-management negotiations.<\/p>\n At the heart of the dispute now are bonus payments for Samsung laborers. Workers in the company\u2019s semiconductor division didn\u2019t receive such extra payments last year, when the unit lost about 15 trillion won. They fear they may not get bonuses again this year even if the division returns to profit, said union leader Son Woo-mok.\u00a0<\/p>\n Samsung calculates workers\u2019 bonuses with a complex formula that deducts its cost of capital from operating profit, adjusted for taxes on a cash basis. The union is asking the company to simply use operating profit like some of its peers\u2014or to be much more transparent in how it determines those numbers, according to union leaders.\u00a0<\/p>\n Historically, bonuses make up a significant portion of worker pay. So missing out on such money can mean a meaningful reduction in compensation.<\/p>\n The dispute is really about whether Samsung will prioritize profits for shareholders or contributions from workers, according to Kwun Seog Kyeun, a\u00a0former business school professor<\/a>\u00a0at Hankuk University of Foreign Studies.<\/p>\n \u201cThe company has been and will continue to be in good faith in negotiations with the union,\u201d Samsung Electronics said in a statement, adding that there has been no impact on production or management activities. It also said the number of workers off on Friday is less than the comparable day last year.<\/p>\n Union leaders said it wouldn\u2019t be possible to count the number of workers joining the one-day strike because they\u2019re not obligated to report that to the union. Some non-unionized employees are taking the long weekend too, making it even more difficult to determine the size of the walkout.\u00a0<\/p>\n In March, Samsung\u2019s labor-management council agreed to increase this year\u2019s pay by 5.1% after narrowing their differences over several rounds of negotiations. The company has historically set pay increases through a council consisting of representatives from both sides. But the agreement was called off in the most recent talks because management didn\u2019t agree to an additional paid day off they demanded, according to union leaders.<\/p>\n The strike comes as Samsung grapples with a set of challenges. In 2023, its operating profit plunged to a 15-year low as its chip division lost money. Smaller rival SK Hynix Inc. stole a lead in the suddenly scorching-hot market for high-bandwidth memory chips, essential for training artificial intelligence models.\u00a0<\/p>\n Samsung\u2019s share price, one of the most popular holdings in the country, is down about 1% since the start of the year. On average, about one in 10 South Koreans own a Samsung share, though about 1 million frustrated retail investors dumped Samsung stock in 2023.\u00a0<\/p>\n Lee Kun Hee, late chairman of Samsung, went to great lengths to prevent unions from forming. Jay Y. Lee, who later succeeded his father, \u200b\u200bapologized in 2020 for \u201call those who have been hurt in labor issues,\u201d and vowed to renounce Samsung\u2019s decades-old \u201cno union\u201d philosophy.\u00a0<\/p>\n Analysts see Samsung\u2019s tight control of labor activism as one reason for its success while other conglomerates, like Hyundai, were often challenged by militant labor activism at their work sites. \u200b<\/p>\n Union leaders and analysts see little impact on Samsung\u2019s production lines of chips and electronics from Friday\u2019s strike. \u00a0<\/p>\n \u201cThis strike will not impact DRAM and NAND Flash production, nor will it cause any shipment shortages,\u201d TrendForce said in a report last week.<\/p>\n<\/div>\nSubscribe to the Eye on AI newsletter to stay abreast of how AI is shaping the future of business. Sign up<\/a> for free.<\/div>\n