For the first time in its 50-plus-year history, Samsung Electronics is facing a strike. The National Samsung Electronics Union, representing around 20% of the company’s workforce has announced a one-day strike on 7 June after wage negotiations.
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The announcement was made during a press conference streamed on the union’s official YouTube channel.
The NSEU represents 28,000 members which is just under a quarter of Samsung’s total workforce in South Korea. The union’s decision follows unsuccessful negotiations over pay and bonus arrangements.
The union is demanding transparent and fair performance bonuses and wage increases. NSEU leader Son Woomok addressed the lack of proper wage negotiations, stating, “There has never been a proper wage negotiation. It has always been carried out by announcing the (outcome) at the labor-management council, which does not include our union, and the company telling us to accept it.”
Union representatives expressed their frustration, stating, “We can no longer afford to see a company that has no will to negotiate. We will fight for workers’ rights and interests.” The union is seeking a 6.5 percent pay increase and a bonus based on the company’s profits.
In a statement to CNN, a Samsung spokesperson said, “The company remains committed to engaging in good faith negotiations with the union and is making every sincere effort to come to an agreement.”
The company has had a challenging few years. During the Covid-19 pandemic, the company faced a shortage of computer chips which was followed by a decline in demand last year due to global economic uncertainty.
In January, the company reported an operating profit of 6.567 trillion won ($4.8 billion) for 2023, it was the weakest annual performance since 2009.
The company lost its position as the top smartphone maker globally. The company is optimistic about a resurgence in demand for mobile devices particularly with the rollout of new AI-powered smartphones.
Last month Samsung reported a more than 10-fold rise in first-quarter operating profit driven by high demand for AI and high-end chips.
Experts have warned that a full-scale strike could impact Samsung’s production of computer chips and disrupt global supply chains for electronics.
Semiconductors are South Korea’s top export reaching $11.7 billion in March, their highest level in nearly two years and accounting for a fifth of the country’s total exports.
Despite recent record profits due to skyrocketing product prices, memory chip sales were negatively impacted by the global economic downturn.
Until 2020, Samsung Group did not permit unions to represent its employees. This changed following the prosecution of its chairman for bribery and market manipulation.
The company’s history of suppressing organized labor activities includes the 2018 indictment of board chairman Lee Sang-hoon for sabotaging legitimate labor activities.
This involved threatening to lower wages of union members, stalling negotiations, and digging up dirt on key union personnel.
In 2020, Samsung’s Executive Chairman Jay Y. Lee pledged to end the company’s union-busting practices. Despite this promise, the union claims there has been no change in management’s attitude towards unions.
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The union has been in talks with Samsung Electronics’ management since January 2024. The two sides have failed to reach an agreement on wage increases and bonuses.
A 6.5% pay rise. A transparent system to measure performance bonuses based on the company’s sales profit.
Samsung’s management proposed a 5.1% wage increase, which the union deemed insufficient. The union has also accepted the company’s proposed pay raise but insists on their additional demands.
Samsung has been known for its staunch opposition to unionization. The company’s founder, Lee Byung-chul, famously opposed unions, stating he would never allow them “until I have dirt over my eyes.”
This anti-union stance persisted for decades with internal documents from 2012 revealing strategies to prevent union formation by dismissing key organizers.
The union was officially established in 2019 during the left-leaning government of President Moon Jae-in. The political climate combined with public scrutiny following the bribery trial of then-vice-chair Lee Jae-yong provided an opportunity for labor organizers to form a union.
On 7 June, 28,000 union members will use their annual leave to strike, effectively halting operations for a day.
A full-scale strike could disrupt Samsung’s production of memory chips and smartphones, potentially affecting global supply chains.
Samsung Electronics is a key player in the semiconductor industry producing high-end memory chips used in generative AI including hardware from industry leaders such as Nvidia.
Union President Son Woo-mok expressed frustration stating that the company is not hearing their demands and has failed to communicate effectively during negotiations.
A union spokesperson addressed that responsibility for any collective action now lies with the company. They declared their intention to strike in response to what they perceive as the company’s neglect and interference in their struggle.
As the world’s largest producer of memory chips and an important player in the smartphone market, any disruption in Samsung’s operations can have effects on global electronics supply chains.
Following the strike announcement, Samsung Electronics’ shares dropped by approximately 2% in Seoul. Analysts warn that labor disputes could negatively impact the company’s stock performance and market position.
Kim Dae-jong, a professor of business at Sejong University, said that having 20% of the workforce on strike would impact the company.
Unlike Hyundai Motor, which frequently deals with strikes, Samsung management lacks experience in handling labor disputes.
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