Seoul: Samsung Electronics Co. and its largest labor union have resumed government-led wage mediation discussions, with the possibility of reaching a last-minute agreement to prevent a strike at the world's leading memory chip manufacturer. The mediation efforts mark the final attempt to resolve differences over performance-based bonuses before an 18-day strike scheduled to begin Thursday.
According to Yonhap News Agency, the two-day negotiation period resumed after an earlier round of mediation concluded without a resolution. The discussions are centered around performance-based bonuses linked to earnings from Samsung's AI-related semiconductor business, amid an ongoing global memory supercycle. Park Soo-keun, chairman of the National Labor Relations Commission, indicated that if the parties do not reach an agreement by 10 p.m., a mediation proposal will be made. This proposal, if agreed upon, will be subjected to a union vote. Failure to pass the vote could result in a strike.
The government's mediation plan stipulates that if either side rejects the proposal, negotiations will collapse, increasing the likelihood of industrial action. The company has suggested maintaining the current excess profit incentive system, with bonuses calculated based on 10 percent of operating profit, and has proposed a special compensation system for a more adaptable incentive structure. In contrast, the union demands fixed performance bonuses amounting to 15 percent of the semiconductor division's operating profit, as well as the removal of payout caps.
An industry source disclosed that some consensus has been reached regarding the elimination of bonus caps set at 50 percent of annual salary. However, disagreements persist over the distribution of performance bonuses to loss-making business units and the formal institutionalization of any agreement. The union has proposed allocating 70 percent of the semiconductor bonus pool to the entire division, with the remaining 30 percent distributed based on unit performance. On the other hand, management contends that this system would reward underperforming units and undermine incentives, advocating for a reduced allocation rate instead.
Samsung Electronics' chip division reported a record operating profit of 53.7 trillion won (US$35.8 billion) in the first quarter, although non-memory units are believed to have incurred losses. Industry analysts warn that a strike could cost the South Korean economy up to 100 trillion won due to its significant reliance on semiconductor exports.
Government officials express concern about the potential strike, suggesting that emergency arbitration powers may be invoked to prevent it. Under South Korean law, the labor minister can issue an emergency arbitration order if a dispute is likely to harm the national economy or disrupt public life. Such an order would halt industrial action for 30 days while mediation and arbitration are conducted. Vice Labor Minister Kwon Chang-jun emphasized that the government aims to resolve the issue through dialogue, without resorting to emergency arbitration, during a parliamentary meeting.