In the usually quiet research center of Samsung Electronics’ headquarters in Hwaseong, loudspeakers blared as union activists urged employees to join their campaign for better wages at the famous South Korean company.
The union wanted a 6 percent raise, while Samsung offered only 4 percent — close to the rate of inflation. Unless chairman Lee Jae-yong comes to the negotiating table to negotiate, they will vote members to strike — the first-ever strike at a company that only recognized unionization in 2020.
“We ask companies to treat employees according to their global status,” said Son Woo-mok, head of the national Samsung Electronics union, which employs 10,000 people.
The threat of strike action comes at a sensitive time for Samsung, which posted a record first-quarter loss of $3.4 billion in its chip division. It has been forced to cut chip production amid an industry downturn and technological competition between the U.S. and China. This is new territory for Samsung, previously known for its hardline stance against organized labor.
“Companies are now at a crossroads and will have to go through a difficult process sooner or later,” said Bae Kyu-shik, a labor expert in Seoul. “Given its inexperience in dealing with unions, it will not be easy to respond effectively to the new challenge of fine-tuning the needs of various workers.”
Investors are paying close attention, said Park Yoo-kyung, governance investment adviser at APG Asset Management. “As a long-term shareholder, we are concerned because of Samsung’s relative inexperience in managing labor relations,” she said. “A strike is not a win-win solution for anyone, especially in difficult times like this.”
The Samsung standoff comes amid a broader crackdown on South Korean labor unions by conservative President Yoon Hee-yeol. A former prosecutor, Yoon described the hardline Korean Federation of Trade Unions as a “deep-seated evil” and encouraged state officials and prosecutors to conduct a full review of suspected illegal union activity. In response, unions organized regular street demonstrations.
Samsung’s founder Lee Byung-chul (grandfather of the current chairman) allegedly announced that the company would allow unions “over my dead body.” South Korean unions are notoriously belligerent, and companies such as Hyundai have had to deal with frequent strikes over wages and other working conditions.
What you see is a snapshot of the interactive graph. This is most likely because you are offline or JavaScript is disabled in your browser.
In 2019, under leftist President Moon Jae-in, state prosecutors accused Samsung of engaging in union-busting and threatened to cut wages for union-linked employees and pull business from seemingly union-friendly subcontractors. The company has been trying to rebuild relations with workers since several executives were convicted of union breaches in 2019.
The union now accounts for about 9 percent of Samsung’s 120,000 domestic workers, a fraction of the 46 percent average union membership at large South Korean companies.
Membership grew from three to 10,000 in four years as the union attracted engineers, researchers and production workers who demanded better pay and more vacation time. While Samsung has long enjoyed a reputation as one of South Korea’s top employers in terms of pay and benefits, its compensation levels lag behind some units of SK Group.
The union has held more than 20 talks with company officials this year, but the talks have stalled and asked the chairman to enter the talks. “The absence of top management at the negotiating table means they do not see us correctly as an adversary,” Son said.
He added that if Lee continued to refuse to talk to them, the strike plan would be put to a vote, though they had not set a deadline for his response. “We are patiently awaiting his response given the enormous impact the strike will have on the national economy and global supply chains,” he said. “You know what happens in chip factories if the process stops for just a second,” he said, referring to the lengthy process of restarting production.
Union members also complained about the company’s “fear-driven” rigid corporate culture and “too intense internal competition” among workers. They also called for a safer working environment. In 2018, Samsung compensated workers exposed to harmful chemicals at its chip manufacturing plants. The company said workplace safety has improved since then and it is investing heavily to improve it further.
Samsung said it would continue to negotiate with the union to reach a deal. “The company guarantees employees’ rights to establish and join trade unions and collective bargaining, and respects legitimate trade union activities stipulated by relevant laws and regulations,” the company said.
Samsung’s reputation as anti-labor has discouraged many workers from joining unions. “We need a union to express our opinions, but I don’t want to join it because it might reduce my chances of getting an overseas job or promotion,” said Lee, a Samsung marketer in his early 30s.
Park Ju-geun, head of research group Leaders Index, warned that Samsung’s performance-based pay policy made it prone to labor conflict. Samsung is likely to maintain its “high pressure” approach, he predicted. “Old habits die hard. The way Samsung treats unions now is not much different from how they have done in the past,” he said. “But as their membership grows and their power grows, it cannot continue to ignore them.”