Samsung Electronics Wage Negotiations Kick Off... Attention on March Settlement (Comprehensive)

Labor and Management Hold Preliminary Meeting Before Negotiations

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

[Image source=Yonhap News]

[Asia Economy Reporter Moon Chaeseok] Samsung Electronics labor and management held a preliminary meeting before starting next year's wage negotiations. Attention is focused on the rate of salary increase. Negotiations are expected to proceed based on this year's 9% increase. The management side is expected to express that even a 9% increase is burdensome, 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, the Samsung Electronics labor and management working-level team held a preliminary meeting for next year's wages and welfare 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 demanding negotiations on next year's wages and welfare to the management and reached the first preliminary meeting after coordinating schedules since the 6th.

Labor-management negotiations are usually held once a week. The best-case scenario is to complete negotiations before the employee promotion personnel changes, estimated to be in early March next year, and apply the new wage system by the end of March. However, 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 the management decided to apply wage increase rates averaging 7.5% last year and 9% in 2022, the labor and management 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. The management is generally considered to have won the negotiation.

If the main issue is the wage increase rate, the argument is based on the inflation rate. Generally, regardless of the industry, labor-management wage and collective agreements are based on the inflation rate. When inflation rises significantly, wages also increase sharply. The labor union's typical logic is that considering the steep 5.7% consumer price inflation over five months from July to November, the wage increase rate should be significantly raised.

However, not only inflation but also exchange rates and interest rates are rising together in a 'triple high' phenomenon, and with a recession causing low economic growth rates, the labor side's traditional 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 through the internal network that it would pay performance bonuses at about 50% of the base salary. The payment rate of the second half's business unit target achievement incentive (TAI) announced that day is known to be about half of the 100% received in the first half for DS (semiconductors), MX (mobile experience), and VD (visual display). The estimated operating profit for Samsung Electronics in the fourth quarter, ranging from 5.8 trillion won (Goldman Sachs) to about 7.9 trillion won (consensus from securities firms the previous day), is somewhat low and is considered a major variable in the wage negotiations. 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 rates for the DS and DX (device experience) divisions should be unified into a single proposal. Some opinions suggest that comparing the wage increase rates directly with those of SK Hynix, which only operates in the semiconductor business, amid controversy over treatment disparities between the DS and DX divisions, is unreasonable.

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