Union reaches agreement with Samsung: strike averted at the last minute

South Korea’s unions have called off the 18-day strike at Samsung at short notice, which was due to start today, after negotiators reached a tentative wage agreement with Samsung management at virtually the last minute. However, this does not mean that the threat to the currently extremely important storage production and supply chains is off the table. Union members are now called upon to vote on the proposal in the next few days.

A supposedly final round of negotiations had previously failed, so the strike at Samsung was scheduled to begin on Thursday. However, the South Korean government brought the negotiating partners together again yesterday in order to avoid the work stoppages. This was obviously successful, as the union temporarily called off the strike on Wednesday. Only if the union members reject the preliminary wage agreement in the vote held from May 23rd to 28th could a strike take place.

Point of contention: employee profit sharing

Details of the agreement concluded are not yet known, but the core of the dispute is about how Samsung’s employees share in the record profits that the group is currently making. The unions demanded that 15 percent of profits be used for bonuses. 70 percent of this should be distributed evenly across all departments, the rest depending on the respective success of the departments. Samsung had previously rejected this and claimed to have accepted most of the demands, except for bonuses that were completely independent of performance.

In total, more than 47,000 union members announced that they wanted to take part in the work stoppage, so that storage production would be completely paralyzed. The consequences for industry and supply chains would be massive. According to media reports, the group alone is threatened with losses of up to 570 million euros per day. The consequences for buyers of Samsung’s (flash) memory have not yet been taken into account and would likely be immense.

Gratitude from the Minister of Labor, Samsung’s promise

But now those involved were able to come to an agreement, at least for the time being. South Korea’s Labor Minister Kim Young-hoon welcomed the agreement and said he is “deeply grateful” that management and unions reached a deal through negotiations, according to the Korea Herald.

Samsung confirmed the tentative wage agreement and thanked the government, employees and other stakeholders who helped finalize the negotiations. At the same time, the company apologized for any concerns that may have arisen and promised to build a “more mature and constructive relationship between employers and employees”.

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