Next Year's Wage Negotiations Kick Off at Samsung Electronics... Is a Double-Digit Increase Possible Despite Poor Performance?

Labor and Management Hold Preliminary Meeting Before Negotiations
Likely to Negotiate Based on 9% Raise This Year

Labor Proposes Double-Digit Increase
Management May Suggest Freeze or Reduction

Samsung Electronics, 53 years after its founding in 1969, signed its first labor-management wage agreement and held the signing ceremony on August 10. (Photo by Samsung Electronics)

[Asia Economy Reporter Moon Chaeseok] Samsung Electronics labor and management held a meet-and-greet, marking the official start of next year's wage negotiations. Attention is focused on the extent of the salary increase. It is expected that negotiations will proceed based on this year's 9% raise. The management is expected to express that even a 9% freeze is difficult, while the labor side is likely to argue that the increase should be at least double digits (in the 10% range).

According to industry sources on the 22nd, Samsung Electronics labor and management officials held a meet-and-greet for next year's wage and welfare negotiations at 2 p.m. the previous day at the Nano Park negotiation hall in Giheung Campus, Yongin, Gyeonggi Province. The joint negotiation team, composed of four unions including the Samsung Electronics Office Workers' Union, Samsung Electronics Gumi Labor Union, Samsung Electronics Labor Union 'Donghaeng', and the National Samsung Electronics Labor Union, sent an official letter to management demanding next year's wage and welfare negotiations, and after coordinating schedules since the 6th, reached the first meet-and-greet.

Labor-management negotiations are usually held once a week. The best-case scenario is for negotiations to conclude before the employee promotion personnel changes, estimated to be in early March next year, so that the new wage system can be applied by the end of March.

It is expected that reaching an agreement within March will not be easy. Last August, Samsung Electronics, for the first time in its 53-year history, signed a wage agreement with the union, undergoing 31 rounds of wage negotiations, indicating significant difficulties. While management decided to apply wage increase rates averaging 7.5% last year and 9% in 2022, the parties agreed to increase the number of holiday consideration days from 3 to 4 and to compensate for unused recharge leave days limited to this year. Management is generally considered to have won the negotiations.

If the main issue is the wage increase rate, the argument centers on the inflation rate. Generally, regardless of the industry, labor-management wage and collective agreements fluctuate in proportion to the inflation rate. When inflation rises significantly, salaries also jump sharply. Considering the steep 5.7% consumer price inflation over five months from July to November, the wage increase rate should be raised substantially. This is the typical logic of the labor union.

However, due to the overlapping 'triple high' phenomenon of rising inflation, exchange rates, and interest rates, as well as the low economic growth rate caused by the recession, the traditional labor-side argument may not hold. The fact that management uncertainty is so high that a 'crisis management system' is in place is also a variable. The previous day, Samsung Electronics announced via the internal network that it would pay performance bonuses amounting to about 50% of the base salary. The second-half business unit target achievement incentive (TAI) payment rates announced that day were reportedly about half of the 100% received in the first half for DS (semiconductors), MX (mobile experience), and VD (visual display). This could be used by management as grounds to propose a 'freeze' or a downward adjustment of the increase rate.

Due to these complex variables, expectations are growing that this year's negotiations will be sluggish. However, it is reported that both labor and management generally agree that the wage increase rate for the DS (semiconductor) and DX (device experience) sectors should be unified into a single proposal. Some argue that comparing the wage increase rates of the DS-DX sectors with those of companies like SK Hynix, which only operate in the semiconductor business, is unreasonable amid ongoing debates about treatment disparities between the DS and DX sectors.

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