Seoul: Samsung Electronics Co. and its largest labor union resumed government-led wage mediation Tuesday, with the looming possibility of reaching a last-minute deal to avert a strike at the world's largest memory chipmaker. The final day of the two-day negotiations followed an initial round that ended without an agreement, as the two sides remained divided over performance-based bonuses ahead of a planned 18-day strike set to begin Thursday.
According to Yonhap News Agency, Park Soo-keun, chairman of the National Labor Relations Commission, noted that both parties were still at odds over several issues but acknowledged a remaining possibility for an agreement. He mentioned that both labor and management are making concessions, although one or two key issues have yet to be resolved.
Labor and management remain sharply divided over performance-based bonuses tied to earnings from Samsung's artificial intelligence (AI)-related semiconductor business, amid an ongoing global memory supercycle. Samsung has proposed maintaining the current excess profit incentive system, allowing the bonus pool to be calculated based on 10 percent of operating profit, and introducing a special compensation system to create a more flexible incentive structure. In contrast, the union demands fixed performance bonuses equal to 15 percent of the semiconductor division's operating profit, along with the removal of payout caps.
The two sides have reportedly reached some agreement on eliminating bonus caps set at 50 percent of annual salary. However, they remain at odds over the distribution of performance bonuses to other loss-making business units and whether the agreement will be formally institutionalized. The union has proposed allocating 70 percent of the semiconductor bonus pool to be shared across the entire division, with the remaining 30 percent distributed based on business unit performance. Management, however, argues that such a system would reward loss-making units and undermine performance-based incentives, pushing instead for a lower overall allocation rate.
Samsung Electronics' chip division posted a record operating profit of 53.7 trillion won (US$35.8 billion) in the first quarter of this year. Despite the memory business's profitability, non-memory units likely posted losses. Industry observers warn that a walkout could cost the South Korean economy up to 100 trillion won, given the country's heavy reliance on semiconductor exports.
Government officials have raised concerns over the strike, suggesting that Seoul may invoke emergency arbitration powers 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 seriously disrupt the lives of ordinary people. Such an order would suspend industrial action for 30 days while the National Labor Relations Commission conducts mediation and arbitration.
Vice Labor Minister Kwon Chang-jun stated that the government's current focus is to resolve the issue through dialogue. "We are currently focusing on resolving the issue through dialogue without emergency arbitration," Kwon said during a parliamentary meeting.