"Management Crisis, Yet Samsung Union Throws Tantrums"

Despite Samsung Electronics' 9% Wage Increase, Union Opposes...Fails to Gain Support

[Asia Economy Reporter Park Sun-mi] "Noble union" "(If the union demands more money due to poor performance, what about us who invested in Samsung Electronics?" "Stock price drops because of the union" (Samsung Electronics shareholder board)

Shareholders' dissatisfaction is rising over the Samsung Electronics labor union's designation of the wage negotiations with management and the labor-management council as illegal and their ongoing high-intensity struggle. Amid rapidly changing internal and external variables, escalating future uncertainties, a sharp drop in stock prices, and even emerging 'crisis theories,' most shareholders cannot understand the union, which receives an average annual wage of about 150 million KRW, reacting strongly against a 9% wage increase. Inside Samsung, there are also concerns about the union's unreasonable demands, considering they represent only 4% of all employees.

According to the Korea Exchange on the 6th, Samsung Electronics' stock price hovered around 66,000 KRW in the morning, remaining at its lowest level in the past year. The stock price, which reached 80,000 KRW last December, broke below the 70,000 KRW level in March this year amid the first-ever union strike threat since the company's founding, and fell below 65,000 KRW on the 28th of last month.

The general market analysis is that Samsung Electronics, which had stormed ahead due to the semiconductor business, is facing difficulties as competition in the semiconductor industry intensifies, supply chain disruptions persist, unresolved owner-related legal risks continue, and uncertainties about future growth engines loom, leading to a decline in stock prices. However, some shareholders believe that unresolved labor-management discord is also negatively impacting the stock price.

In fact, the Samsung Electronics online shareholder board is flooded with negative posts claiming that the union's aggressive activities are causing the stock price to fall. While urgent measures are needed to resolve the 'uncertainties' mentioned dozens of times during Samsung Electronics' Q1 earnings conference call, the union's obstinacy is seen as hindering corporate development.

The Samsung Electronics Labor-Management Council decided at the end of last month to set this year's average wage increase for all employees at 9%, combining a basic increase rate of 5% applied to all employees and an average performance increase rate of 4% determined by individual evaluations. However, the union claims it is illegal for the labor-management council, rather than the union with collective bargaining rights, to handle the wage increase proposal and has even filed a complaint with the Ministry of Employment and Labor.

The management's position is that the labor-management council is a body where employer representatives and employee representatives negotiate working conditions such as wages, and since the wage increase rate has been decided annually through the council, there is no legal issue. The employee representatives in the labor-management council are elected by employee votes. This is why some argue that these representatives, elected by the 96% of non-union employees, actually have more employee representativeness than the union members, who make up only 4-5% of all Samsung Electronics employees.

Inside Samsung Electronics, while there is sympathy for the union's efforts to improve workers' treatment, there is widespread negative perception about a minority of union members opposing agreements made by the labor-management council. Given the economic difficulties caused by the COVID-19 pandemic and the widening wage gap between large and small companies, it is difficult for Samsung Electronics employees' wage levels to gain general public sympathy when they demand higher wages based on record-high performance. According to Samsung Electronics' business report, the average annual salary per employee was about 144 million KRW last year.

An industry insider said, "If the union members in a company exceed the majority, the employee representatives participating in the labor-management council would be appointed by the union, but if they are less than the majority, the union does not represent all members, so it is natural to have a negotiation body for non-union members' treatment." He added, "The current opposition by the Samsung union, which accounts for only 4%, could be seen as denying the entire labor-management council."

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