Samsung is at risk of strike for the first time

At the normally quiet research center at Samsung Electronics’ head office in Hwaseong, loudspeakers blare as union workers encourage workers to join their campaign for higher wages at the Korean company.

The union wants a 6 percent pay raise while Samsung is only offering 4 percent — close to the rate of inflation. Unless chairman Lee Jae-yong comes to the table for talks, they will vote their members on strike – which will be a first in 2020 at a company with only recognized unions.

“We are asking the company to treat its workers globally,” said Son Woo-mok, leader of the 10,000-strong national Samsung Electronics union.

The threat of strike action comes at a sensitive time for Samsung, which posted a record loss of $3.4 billion in its chip division in the first quarter. It has been forced to cut chip production amid a slowdown in the industry and the US-China technology rivalry. For Samsung, previously known for its aggressive stance toward organized labor, this is new territory.

“The company is now at a crossroads, going through a rocky process of late,” said Bae Kyu-shik, a labor expert in Seoul. “Given its lack of experience in dealing with unions, it will not be easy to handle effectively the new challenges of fixing the demands of various workers.”

Investors are watching closely, said Park Yoo-kyung, investment advisor on governance at APG Asset Management. “As a long-term shareholder, we are concerned because Samsung is relatively inexperienced in managing industrial relations,” he said. “A strike is a no-win solution for anyone, especially in these difficult times.”

The standoff at Samsung comes amid a sweeping crackdown on trade unions in South Korea by the country’s conservative President Yoon Suk Yeol. Yoon, a former prosecutor, has described the radical Korean Confederation of Trade Unions as a “deep-rooted evil”, encouraging state officials and prosecutors to conduct a comprehensive review of alleged illegal union activity. Unions have organized regular street demonstrations in response.

Samsung founder Lee Byung-chul, grandfather of the current chair, reportedly declared that unions would be allowed in the firm “over my dead body”. South Korea’s labor unions have a reputation for militancy, and companies such as Hyundai Motor have faced frequent strikes over wages and other working conditions.

In 2019, during the administration of leftist President Moon Jae-in, state prosecutors alleged that Samsung was involved in union busting, as well as threatening to cut wages of workers affiliated with unions and subcontractors. was withdrawing business from businesses that appeared favorable to the union. In 2019 several executives were convicted of union sabotage and since then, the company has sought to re-establish relations with the workers.

The union now represents about 9 percent of Samsung’s 120,000 domestic workers, a fraction of the 46 percent average union membership at large Korean companies.

Membership grew from just three people to 10,000 in four years, as the union attracted engineers, researchers and production workers for better wages and more holidays. While Samsung has long been hailed as one of the best employers in South Korea in terms of pay and welfare benefits, its wages have fallen behind some SK Group units.

The union has held more than 20 meetings with company officials this year, but since the talks have reached an impasse, the president has been requested to join the talks. “The absence of top managers at the negotiating table means they are not properly recognizing us as an equal,” Son said.

He said a strike plan would be put to a vote if Lee continued to refuse to talk to him, though he had not yet set a deadline for his response. “We are patiently waiting for their response in view of the huge impact of the strike on the national economy and global supply chain,” he said. “You know what happens to a chip plant if the process stops for just a second,” he said, referring to the long process to restart production.

Union members also complain of the company’s “fear-driven” rigid corporate culture and “extremely severe internal competition” among workers. He has also called for a safe working environment. In 2018, Samsung compensated workers exposed to harmful chemicals at its chip-making plants. The company said workplace safety has improved since then and is investing heavily to make further improvements.

Samsung said it would continue to talk to the union to reach an agreement. The company “guarantees the right of employees to establish and join labor unions, as well as to bargain collectively, and respects valid union activities under relevant laws and regulations,” the company said.

Many workers are reluctant to join a union because of Samsung’s anti-labor reputation. “We need a union to voice our opinion, but I don’t want to join because it might reduce my chances of getting a job or promotion overseas,” said Lee, a Samsung marketer in his early 30s.

Park Joo-geun, head of research group Leaders Index, cautioned that Samsung’s performance-driven remuneration policy has made it prone to labor conflicts. He predicted that Samsung would likely maintain its “high-handed” approach. “Old habit dies hard. The way Samsung treats their unions now isn’t much different from their past practices,” he said. “But it will not be able to continue to ignore them as their membership increases and their power becomes stronger.”

At the normally quiet research center at Samsung Electronics’ head office in Hwaseong, loudspeakers blare as union workers encourage workers to join their campaign for higher wages at the Korean company.

The union wants a 6 percent pay raise while Samsung is only offering 4 percent — close to the rate of inflation. Unless chairman Lee Jae-yong comes to the table for talks, they will vote their members on strike – which will be a first in 2020 at a company with only recognized unions.

“We are asking the company to treat its workers globally,” said Son Woo-mok, leader of the 10,000-strong national Samsung Electronics union.

The threat of strike action comes at a sensitive time for Samsung, which posted a record loss of $3.4 billion in its chip division in the first quarter. It has been forced to cut chip production amid a slowdown in the industry and the US-China technology rivalry. For Samsung, previously known for its aggressive stance toward organized labor, this is new territory.

“The company is now at a crossroads, going through a rocky process of late,” said Bae Kyu-shik, a labor expert in Seoul. “Given its lack of experience in dealing with unions, it will not be easy to handle effectively the new challenges of fixing the demands of various workers.”

Investors are watching closely, said Park Yoo-kyung, investment advisor on governance at APG Asset Management. “As a long-term shareholder, we are concerned because Samsung is relatively inexperienced in managing industrial relations,” he said. “A strike is a no-win solution for anyone, especially in these difficult times.”

The standoff at Samsung comes amid a sweeping crackdown on trade unions in South Korea by the country’s conservative President Yoon Suk Yeol. Yoon, a former prosecutor, has described the radical Korean Confederation of Trade Unions as a “deep-rooted evil”, encouraging state officials and prosecutors to conduct a comprehensive review of alleged illegal union activity. Unions have organized regular street demonstrations in response.

Samsung founder Lee Byung-chul, grandfather of the current chair, reportedly declared that unions would be allowed in the firm “over my dead body”. South Korea’s labor unions have a reputation for militancy, and companies such as Hyundai Motor have faced frequent strikes over wages and other working conditions.

In 2019, during the administration of leftist President Moon Jae-in, state prosecutors alleged that Samsung was involved in union busting, as well as threatening to cut wages of workers affiliated with unions and subcontractors. was withdrawing business from businesses that appeared favorable to the union. In 2019 several executives were convicted of union sabotage and since then, the company has sought to re-establish relations with the workers.

The union now represents about 9 percent of Samsung’s 120,000 domestic workers, a fraction of the 46 percent average union membership at large Korean companies.

Membership grew from just three people to 10,000 in four years, as the union attracted engineers, researchers and production workers for better wages and more holidays. While Samsung has long been hailed as one of the best employers in South Korea in terms of pay and welfare benefits, its wages have fallen behind some SK Group units.

The union has held more than 20 meetings with company officials this year, but since the talks have reached an impasse, the president has been requested to join the talks. “The absence of top managers at the negotiating table means they are not properly recognizing us as an equal,” Son said.

He said a strike plan would be put to a vote if Lee continued to refuse to talk to him, though he had not yet set a deadline for his response. “We are patiently waiting for their response in view of the huge impact of the strike on the national economy and global supply chain,” he said. “You know what happens to a chip plant if the process stops for just a second,” he said, referring to the long process to restart production.

Union members also complain of the company’s “fear-driven” rigid corporate culture and “extremely severe internal competition” among workers. He has also called for a safe working environment. In 2018, Samsung compensated workers exposed to harmful chemicals at its chip-making plants. The company said workplace safety has improved since then and is investing heavily to make further improvements.

Samsung said it would continue to talk to the union to reach an agreement. The company “guarantees the right of employees to establish and join labor unions, as well as to bargain collectively, and respects valid union activities under relevant laws and regulations,” the company said.

Many workers are reluctant to join a union because of Samsung’s anti-labor reputation. “We need a union to voice our opinion, but I don’t want to join because it might reduce my chances of getting a job or promotion overseas,” said Lee, a Samsung marketer in his early 30s.

Park Joo-geun, head of research group Leaders Index, cautioned that Samsung’s performance-driven remuneration policy has made it prone to labor conflicts. He predicted that Samsung would likely maintain its “high-handed” approach. “Old habit dies hard. The way Samsung treats their unions now isn’t much different from their past practices,” he said. “But it will not be able to continue to ignore them as their membership increases and their power becomes stronger.”