Samsung, Union Extend Talks to Avert Historic Strike Threatening Global Supply Chains
- tech360.tv
- 5 hours ago
- 3 min read
Samsung Electronics and its labour union have extended negotiations in an effort to prevent the largest strike in the tech giant's history. Concerns persist that a walkout by more than 45,000 workers could significantly impact South Korea's economy and disrupt global supply chains.
An 18-day strike is threatened to commence, coinciding with an acute global shortage of memory chips. These chips are vital components for AI data centres, smartphones, and laptops, and their scarcity has recently driven substantial profits for Samsung and its peers.
Previous talks had followed the collapse last week of a first round of government-mediated negotiations. The dispute centres on pay and bonuses at the world's largest memory chipmaker, which accounts for nearly a quarter of South Korea's exports.
A union representative stated that talks would continue, affirming the union's commitment to "engaging in negotiations in good faith." Park Su-keun, chairman of the National Labor Relations Commission, also confirmed that talks would resume, noting the two sides remained far apart in their earlier discussions.
The union has demanded Samsung abolish a bonus cap of 50% on annual salaries. Furthermore, it seeks to allocate 15% of annual operating profit to a bonus pool shared by workers, with this arrangement formalised in contracts.
Samsung, according to the union, proposed assigning 9%-10% of its annual operating profit to a bonus, should that exceed 200 trillion won this year. The company's proposal maintained the 50% bonus pay cap.
Adding pressure on the union, a South Korean court partially granted Samsung's request for an injunction to prevent illegal labour actions during the strike. The ruling carries implications for thousands of workers.
About 47,000 workers indicated they would join a walkout. The ruling means a number of these workers may be required to show up to work in the event of a strike to prevent some production materials and facilities from being damaged.
A court spokesperson said the two main unions could face fines of 100 million won (USD 72,000) per day each if they failed to comply. Union leaders could be fined 10 million won per day.
The union, in a statement, affirmed the court ruling would not deter it from pursuing a strike if talks failed to achieve a deal. However, it pledged to engage seriously in negotiations. Samsung Electronics declined to comment.
Samsung Electronics shares rose as much as 6.7% in morning trade after the court's ruling. The shares ended up 3.88%, still ahead of a 0.31% rise in the benchmark KOSPI index.
South Korean government officials have increasingly expressed worries about a strike, warning it could pose a significant risk to economic growth, exports, and financial markets. President Lee Jae Myung, who is a former rights lawyer and is seen as leading a union-friendly government, stated on X on Monday that management rights should be respected as much as labour rights.
South Korean Prime Minister Kim Min-seok said on Sunday the government would pursue all options, including emergency arbitration, to prevent a strike. An emergency arbitration order can be invoked by the labour minister if a dispute is deemed likely to harm the economy or daily life.
Such an order immediately prohibits industrial action for 30 days while the National Labor Relations Commission conducts mediation and arbitration. The union has indicated it would not give in to pressure on arbitration and would not agree to a pay deal if the company offered a less favourable proposal.
After the collapse of negotiations last week, executives from Samsung's chip division urged the union to refrain from striking. Media reports, citing a participant at a meeting, indicated concerns raised by semiconductor customers such as Nvidia.
The reports noted that some customers had indicated they might temporarily stop accepting shipments during a strike. This was due to an inability to guarantee product quality. Samsung declined to comment on the matter.
Samsung Electronics and its union are holding further talks to avoid a strike.
An 18-day strike is threatened, potentially impacting global memory chip supply chains.
The union demands removal of a 50% bonus cap and allocation of 15% of operating profit to a bonus pool.
Source: REUTERS
