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Samsung Union Initiates First-Ever Strike Due to Wage Disagreement

ByYasmeeta Oon

Jun 8, 2024

Samsung Union Initiates First-Ever Strike Due to Wage Disagreement

On a significant day in Samsung Electronics Co.‘s history, the company witnessed its first-ever strike by the largest union, marking a pivotal moment in the tech giant’s 55-year history. The National Samsung Electronics Union, which represents about 28,400 workers, orchestrated a one-day strike that coincided with a long weekend, leveraging a public holiday on Thursday and the weekend that follows.

Lee Hyun-kuk, the deputy secretary general of the union, described this move as “a soft start and a symbolic move,” during an interview with Bloomberg News. He indicated that this could be the beginning of more severe actions, stating, “We have plans for subsequent strikes if the management refuses to communicate. We are not ruling out an all-out general strike.”

Despite the historic nature of the event, the morning in Seoul saw minimal disruption. The union had previously placed a bus with a banner in front of Samsung’s office building since calling the strike on May 29, but no significant gatherings or rallies occurred on Friday.

The ongoing standoff between the union and management halted all discussions, primarily revolving around pay issues and work conditions. Earlier in March, Samsung’s labour-management council agreed to a 5.1% pay increase after several rounds of negotiations. However, disputes arose over an additional paid day off, which management declined in the latest discussions.

At the core of the contention are bonus payments. Samsung employs a complex formula for calculating bonuses, which deducts the cost of capital from operating profits, adjusted for taxes on a cash basis. The union has demanded a simpler and more transparent method, ideally based solely on operating profits.

The current strike at Samsung contrasts sharply with the country’s history of more violent industrial actions, such as the 2009 incident at Ssangyong Motor Co, where workers occupied a plant for months. This historical backdrop highlights the uniqueness of the peaceful nature of Samsung’s first strike.

Samsung has faced a tumultuous financial year, with its operating profit hitting a 15-year low due to losses in its semiconductor division. This division faced approximately 15 trillion won (RM51.52 billion) in losses last year. The ongoing strike adds to the challenges, including competition from rivals like SK Hynix Inc, which has recently taken the lead in the high-bandwidth memory chip market crucial for artificial intelligence applications.

Key Financial and Union Dispute Figures
2023 Operating Profit15-year low
Union Members28,400
Proposed Pay Increase5.1%
Bonus Calculation DisputeCost of capital deduction from operating profit
2024 Projected Losses15 trillion won (RM51.52 billion)
CompetitionSK Hynix Inc leads in high-bandwidth memory chips

Despite the strike, industry analysts, including those from TrendForce, believe that there will be minimal impact on Samsung’s production capabilities, particularly in DRAM and NAND Flash production lines. “This strike will not impact DRAM and NAND Flash production, nor will it cause any shipment shortages,” stated a report from TrendForce last week.

The broader implications of this strike are significant. Samsung’s shares have seen a slight decline, with about one million frustrated retail investors dumping their shares in 2023. Furthermore, the company’s historical stance against union formation, championed by the late Lee Kun Hee and later somewhat softened by his successor, Jay Y Lee, has played a critical role in its labor management strategy.

As Samsung grapples with both internal labor disputes and external market pressures, the outcomes of this strike and potential future actions could define the company’s approach to labor relations and its competitive stance in the global market. This event is not just a corporate dispute but a test of the evolving labor dynamics within one of the world’s leading tech giants.

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Featured Image courtesy of Tom’s Hardware

Yasmeeta Oon

Just a girl trying to break into the world of journalism, constantly on the hunt for the next big story to share.

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