Samsung Electronics, South Korea’s largest company and the world’s largest electronics manufacturer has recently been embroiled in a labor dispute crisis. A union of Samsung Electronics said they will launch a historic strike if the company does not meet their demands.
The union says it represents 9% of Samsung employees about 10,000 people. They issued a statement on Thursday accusing Samsung management of refusing to negotiate with them on salaries. They previously demanded a pay hike of more than 6% this year, in part to offset more than 4% inflation in South Korea. But Samsung management announced last month that it would give only a 4.1% increase to its best employees and a 2% increase to the average employee. Samsung Electronics said in a response to Bloomberg’s questions that the company followed all relevant procedures and will continue to communicate with the union.
The union also asked Samsung Electronics’ chairman Lee Jae-Yong to personally participate in the negotiations. Speaking at a press conference in front of the Samsung building in Gangnam-gu, Seoul, union representative Lee Hyun-kook said, “We will decide whether to strike after discussing with our 10,000 members, depending on the attitude of Chairman Lee Jae-Yong, whom we sincerely request to come to the bargaining table for dialogue.”
If Samsung Electronics goes on strike, then unions at 11 other Samsung Group affiliates, such as construction company Samsung Construction and electric car battery maker Samsung SDI, will follow suit. We’re not just looking for a pay rise, but to protest Samsung’s crackdown on unions,” said Oh Sang-hoon, a union representative for Samsung Fire & Marine Insurance. The chairman apologized for union-free management in 2020, but he still hasn’t met with us.”
For Samsung Electronics, this employee discontent comes at an unfavorable time. Samsung Electronics is grappling with a market downturn as global demand for a variety of products, from memory chips to smartphones and home appliances, declines. Samsung Electronics, a representative of the global tech economy, lost $3.4 billion in its chip division alone in the first quarter of this year (currently about RMB 23.494 billion).
Strikes are not uncommon in South Korea, where unions have significant influence in local politics and business, but this will be the first time Samsung has gone on strike since its founding in 1969. Last year, Samsung’s union was given the right to strike after pay talks failed but did not implement it, and Thursday’s action comes after talks between the two sides broke down this week, a negotiation in which the union initially demanded a 10% pay hike and later offered various options, including bonuses above rivals or a lump-sum payment, The Korea Herald reported Wednesday. But Samsung Electronics agreed last month to an average pay hike of just 4% this year, an agreement the union said was not reasonable enough and bypassed the union.
Samsung Electronics said last week that it expects demand in several markets, including smartphones, computers and storage, to gradually improve starting in the second half of this year. But before that, Samsung Electronics may have to face the risks and challenges of labor disputes.
