'Unions Boosting Combat Power with New Government Inauguration' Companies Held Back 'Anxious'

Samsung Electronics Faces First 'Strike Crisis' Since Founding... Labor and Management at Odds Over Wage Increase Rate
Automotive Industry Also Senses 'Tough' Trend Change This Year
Experts "Concern Over Corporate Productivity Weakening... Labor and Management Must Coexist"

[Asia Economy Reporters Choi Dae-yeol, Kim Jin-ho, Moon Chae-seok] "Raise wages by 15.7%." (Samsung Electronics Labor Union) "We will initiate legal procedures to enforce domestic factory facility investments." (Kumho Tire Union) "We will strongly resist if the transition to future vehicles results in employment insecurity." (Hyundai Motor Union)

Although corporate management is expected to get back on track with the COVID-19 endemic (periodic outbreaks of infectious diseases), labor union risks are causing headaches at major workplaces. Amid the global emergency caused by the COVID-19 pandemic and the collapse of supply chains following Russia's invasion of Ukraine, labor groups are already preparing to raise their combat readiness.

Strong union leaderships have already been elected one after another in key manufacturing sectors, entering a hardline mode. Experts advise that considering global leading competitors are threatening domestic companies with swift future growth strategies and large-scale investments, labor and management must unite for survival.

◆ Samsung Electronics Faces First Strike Crisis Since Founding = According to the business community on the 12th, Samsung Electronics is struggling to find common ground in labor-management conflicts over wage increases. Normally, labor-management councils hold meetings to finalize the annual wage increase rate in February or March, but this year, the gap between labor and management positions is so wide that no conclusion has been reached.

The core issue is the wage increase rate. The workers' representatives have demanded a historic high basic increase rate of 15.7%, but the management is reportedly reluctant due to the burden of labor costs. Last year, Samsung Electronics' labor-management council agreed on an average wage increase of 7.5%.

As the situation enters a prolonged phase, some analyses suggest that Samsung Electronics is heading toward its first strike crisis in 53 years since its founding in 1969. It is reported that the union is preparing to use the 'strike card' as a breakthrough in the deadlocked wage negotiations.

However, the demand for a 15.7% wage increase is being criticized as excessive both in public opinion and inside and outside Samsung Electronics. While it is true that Samsung Electronics achieved record-breaking performance last year as the union claims, there are concerns about whether it is appropriate to significantly increase labor costs all at once amid COVID-19 and intensified global semiconductor competition. Samsung Electronics, with more than 110,000 domestic employees, already bears an overwhelming labor cost burden compared to other companies. Last year, Samsung Electronics spent about 15.8 trillion won on labor costs, an 18.4% increase from the previous year, marking the largest scale ever.

There are also concerns about representation. There is worry whether the union, which accounts for only 4% of the total 110,000 employees, can properly reflect the overall stance. A company official said, "The union itself is mostly composed of certain ranks, so from the perspective of most other employees, there is strong internal criticism that the union does not adequately represent their complaints and demands toward the company."

[Image source=Yonhap News]

◆ "Investment and Workforce" Demands but Neglects Workplace Competitiveness = In the automotive industry, signs of labor-management conflicts are emerging at major workplaces. Hyundai Motor, Kia, Korea GM, and SsangYong Motor, which concluded wage and collective bargaining last year without strikes, have seen a shift in atmosphere this year. The strong unions at Hyundai Motor, Kia, and major affiliates have agreed to speak with one voice on employment and workforce issues. This is because they judged that considerable changes are inevitable both inside and outside the unions as the automotive production paradigm shifts from internal combustion engines to electric vehicles.

The unions repeatedly oppose workforce redeployment, transfer of finished vehicle production volumes to overseas factories, and the establishment of new plants, leading to prolonged negotiations with management. Korea GM is also engaged in a tug-of-war between labor and management over workforce redeployment at the Bupyeong plant. The utilization rate difference between the two production lines (Plant 1 and 2) at Bupyeong has widened, and workforce adjustments are needed between plants, including new models scheduled for pilot production at the Changwon plant in the second half of this year, but the union is raising issues such as improved treatment. An industry insider expressed concern, saying, "General Motors (GM) headquarters in the U.S. will allocate electric vehicle volumes by evaluating the competitiveness of plants by country, but if the union only raises hardline voices, it will not be easy."

The Kumho Tire labor and management are clashing over domestic and overseas factory investment issues. At a meeting held last month with labor, management, major shareholders, and KDB Industrial Bank, the major shareholder Double Star made it clear that there would be no additional facility investment at the Gwangju plant, which is being relocated, stating that Kumho Tire is the only one among the global top 20 to be in deficit. The union has decided to take legal steps to ensure the company proceeds with domestic factory facility investments as originally planned.

Experts warn that labor-management conflicts could intensify further after the new government takes office, potentially severely damaging corporate productivity. Professor Yoon Dong-yeol of Konkuk University said, "The unions have strengthened their social and political influence through negotiations with the government so far," adding, "They should focus more on practical coexistence between labor and management, productivity issues directly linked to corporate competitiveness, and growing the workplace."

This content was produced with the assistance of AI translation services.