South Korea’s Samsung Electronics is on the verge of its first worker strike in half a century as wage talks with the company’s union broke down. After months of negotiations, the National Samsung Electronics Labor Union filed an arbitration application with South Korea’s National Labor Relations Commission over the weekend after it failed to reach an agreement with management over wages for 2021.
The union said it would have the legal right to strike if an arbitration agreement could not be reached within 10 days, something that has never happened in the company’s 53-year history. Obviously, any factory shutdown will have a significant negative impact, given that the supply chain tightening has already affected the tech industry.
The National Samsung Electronics Union said in a statement: “Although the union has held 15 rounds of negotiations with Samsung, management unilaterally delayed the progress of the negotiations in a deceptive manner. We submitted arbitration to the National Labor Relations Board because we observed Negotiations will not go forward. Our future actions will depend on Samsung’s willingness to negotiate.”
Samsung Electronics management said it would continue to negotiate with workers, but rejected the union’s demands to give each employee an annual salary increase of 10 million won ($8,400) and a performance payout equal to 25 percent of the group’s operating profit. bonus. The company’s joint labor-management board agreed on last March to increase base pay by 4.5 percent for 2021 and boost performance bonuses by 3 percent.
Union workers at Samsung subsidiary WelStory also held a rally in front of the company’s headquarters to protest management’s refusal to pay performance bonuses. Workers asked management to share the company’s record revenue last year, but management cited a 96 billion won ($80 million) fine by the Fair Trade Commission (FTC) in June last year as the main reason for the refusal.
Meanwhile, employees at LG Electronics, a subsidiary of the LG Group, who complained last year about different bonus amounts for each business unit, recently took to the Internet to complain to CEO Cho Joo-wan, who remained reluctant to say what was expected to be this year. The specific amount of the performance bonus is paid later in the month.
Its sister company, LG Chem, gave performance bonuses to employees last month, and it said it raised the bonus more than originally planned after protests from employees. Employees asked management to share profits from LG Energy Solution’s initial public offering (IPO).
At the same time, minority shareholders in Samsung and LG subsidiaries have expressed concern that the pay rise could reduce shareholder returns. The Korea Enterprise Confederation also said in a report that unreasonable wage increases could hamper companies’ global competitiveness and exacerbate economic polarization.