Crisis averted – Samsung employees approved a new wage agreement under which 10.5% of the company’s semiconductor operating profits would be distributed as a special bonus to workers in Samsung’s chip businesses.
Here’s the quick backstory. Samsung was facing the largest worker strike in its history after workers in Device Solutions (memory, chipsets and fabs) became unhappy with the size of the bonuses they received compared to their peers at rival SK Hynix. The government stepped in and the workers’ union postponed a planned 18-day strike while negotiations took place between 22 and 27 May.
At that time, Samsung and the employee union reached a new agreement. Workers voted and accepted the agreement by a large margin – 74% voted in favor.
Now some employees in Samsung’s memory division will receive a bonus of up to $416,000 this year. The average salary in South Korea is around $32,000, so it’s absolutely huge. Workers at the other two semiconductor divisions will also get big bonuses, though not as big.
To put things in context, Samsung accounts for about a quarter of South Korean exports. And the company’s memory business is critical to the global electronics industry. The Prime Minister estimated that if there had been an 18-day strike, there would have been a loss of KRW 1 trillion (about $660 million).
With a federally approved deal, all is good now, right? Not good. First, shareholders are not happy because the deal was not approved at the shareholders’ meeting and, worse, these terms will reduce the money distributed to said shareholders.
But Samsung also has to be concerned about the feelings of its other employees. The union representing semiconductor divisions got what it asked for. However, the union representing the Electronics Division left the negotiating table due to disagreements – this union is now asking the court to block the vote (Electronics workers did not take part in the vote). Workers in other parts of the Samsung group will receive much smaller bonuses than their peers working in the semiconductor sector.