Samsung faces threat of first-ever strike

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In the normally quiet research center at Samsung Electronics’ Hwaseong headquarters, loudspeakers blare as union activists urge staff to join their campaign for higher wages at the notorious South Korean company.

The union wants a 6% wage increase when Samsung offers only 4% — close to the rate of inflation. Unless Chairman Lee Jae-yong comes to the negotiating table, they will vote their members for a strike – which would be the first at a company that will only recognize unions in 2020.

“We ask the company to treat its workers in accordance with its global reputation,” said Son Woo-mok, leader of the National Samsung Electronics Union, which has 10,000 members.

The strike threat comes at a sensitive time for Samsung, which posted a record $3.4 billion loss in its chip division in the first quarter. He was forced to production of cut chips amid a slump in industry and technology rivalry between the United States and China. For Samsung, previously known for its aggressive stance on organized labor, this is new territory.

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

Investors are watching closely, said Park Yoo-kyung, governance investment adviser at APG Asset Management. “As a long-term shareholder, we are concerned because Samsung is relatively inexperienced in managing social relations. A strike is not a win-win solution for anyone, especially in a difficult time like this. »

The standoff at Samsung comes amid a broader crackdown on unions in South Korea by the country’s conservative president, Yoon Suk Yeol. A former prosecutor, Yoon called the Korean Confederation of Trade Unions a “deep-rooted evil,” encouraging state officials and prosecutors to conduct thorough reviews of alleged illegal union activity. Unions staged regular street protests in response.

Samsung founder Lee Byung-chull, grandfather of the current chairman, reportedly said unions would be allowed in the company “over my corpse”. South Korean unions have a reputation for being militant, and groups such as Hyundai Motor have faced frequent strikes over wages and other working conditions.

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In 2019, under the administration of leftist President Moon Jae-in, state prosecutors alleged that Samsung had been involved in union busting, in addition to threatening to cut wages for union-affiliated employees and withdraw contracts to sub-contractors who seemed pro-union. Several executives were found guilty of union sabotage and since then the company has sought to restore relations with the workers.

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

Membership has grown from just three to 10,000 in four years as the union has attracted engineers, researchers and production workers demanding better pay and more time off. While Samsung has long had a reputation as one of South Korea’s top employers in terms of salaries and benefits, its salaries have lagged behind some SK Group units.

The union has held more than 20 meetings with company officials this year, but talks have stalled, hence the president’s request to begin talks. “The absence of senior executives at the negotiating table means they don’t properly recognize us as a counterparty,” Son said.

He added that the strike plan would be put to a vote if Lee continued to refuse to speak to them, although they did not set a deadline for his response. “We patiently await his response, given the enormous implications a strike will have on the national economy and the global supply chain,” he said. “You know what happens to a chip factory if the process just stops for a second,” he said, referring to the long process of restarting production.

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

Samsung said it would continue to discuss with the union to reach an agreement. “The company guarantees the right of employees to form and join trade unions as well as to bargain collectively and respects legal trade union activities under applicable laws and regulations,” the company said.

Samsung’s anti-union reputation makes many workers reluctant to join the union. “We need a union to express our opinions, but I don’t want to join it because it might reduce my chances of getting a job or promotion overseas,” said Lee, a marketer at Samsung. in their early thirties.

Park Ju-geun, head of research group Leaders Index, warned that Samsung’s performance-based pay policy made it prone to labor disputes. He said Samsung would likely maintain its “high-handed” approach.

“Old habits die hard. The way Samsung now treats its unions is not that different from their past practices,” he said. “But it won’t be able to continue ignoring them as their members increase and their power grows stronger.”