Seoul: Samsung Electronics Co.'s union announced on Wednesday that it will move forward with a strike scheduled for later this week, citing management's rejection of a government-mediated proposal.
According to Yonhap News Agency, the company's largest union stated, "We accepted the mediator's proposal," affirming their decision to proceed with the legally scheduled general strike. This strike involves nearly 48,000 workers and is expected to last for 18 days. The conflict arises from prolonged disagreements over performance-based bonuses, especially those tied to the tech giant's AI-related semiconductor business amidst a global memory supercycle.
Samsung Electronics' management expressed "deep regret" over the union's decision and urged them to return to negotiations. In a press release, the company noted, "Despite the company largely incorporating the union's demands, it continues to insist on an unreasonably large compensation package even for loss-making business units."
The dispute has been ongoing since late last year, with both parties unable to reconcile their differences regarding performance-based bonuses. Samsung proposed maintaining the current excess profit incentive system, suggesting that the bonus pool be calculated based on 10 percent of operating profit. Additionally, it introduced a special compensation system to create a more flexible incentive structure.
However, the union demands fixed performance bonuses equivalent to 15 percent of the semiconductor division's operating profit, alongside the removal of payout caps. During the government-mediated negotiations, both parties agreed on eliminating bonus caps set at 50 percent of the annual salary, but they remain at odds over how bonuses should be distributed, particularly in loss-making business units, and whether these agreements should be formally institutionalized.
The South Korean government has voiced concerns that a prolonged strike could adversely affect the nation's export-driven economy, given that semiconductor exports contribute approximately 35 percent of the country's total outbound shipments. Global companies dependent on South Korea's semiconductor supply chain have also expressed apprehensions regarding potential supply disruptions.