Samsung Labor and Management Fail to Bridge 'Unprofitable Business Unit Compensation' Gap... General Strike to Proceed Tomorrow (Comprehensive)

Third Post-Mediation Session Between Samsung Labor and Management Ends

Compensation for Non-Memory Loss-Making Divisions at Center of Dispute

Union: "Union Agreed, Management Rejected"

Company: "Demands for Loss-Making Division Compensation Are Excessive"

On May 20, just one day before the scheduled general strike, Samsung Electronics labor and management held a final round of negotiations but failed to reach an agreement. The labor union announced that the management had rejected the mediation proposal put forth by the Central Labor Relations Commission and declared that it would proceed with the general strike on May 21 as planned. In contrast, the management stated that it could not accept the mediation proposal, citing the union's demand for excessive bonuses to be paid to the foundry (semiconductor contract manufacturing) and System LSI divisions, which have been posting multi-trillion-won deficits every year.

On this day, Samsung Electronics labor and management held the third post-mediation meeting at the Central Labor Relations Commission in the Sejong Government Complex. Despite three days of marathon negotiations, including this day, the parties failed to reach an agreement, and the mediation ended. The Central Labor Relations Commission stated, "We presented a mediation proposal to Samsung Electronics labor and management, but the second post-mediation attempt was unsuccessful." The Commission explained the reason for the breakdown, saying, "The labor union accepted the mediation proposal, but the management said it would put the decision on hold and did not sign." Park Sugun, chairperson of the Central Labor Relations Commission, said, "Although this round of mediation did not lead to a final agreement, if labor and management jointly request further post-mediation, we will initiate mediation at any time to support the negotiations."

During the three days of mediation, under the arbitration of Chairperson Park, Choi Seungho, head of the Samsung Electronics branch of the Samsung Group Super-Enterprise Union (Super-Enterprise Union), represented the labor side, while Yeomyeong Gu, Executive Vice President and Head of the Device Solutions (DS) People Team, served as the chief negotiator for management. Previously, on May 18, Samsung Electronics labor and management held the second post-mediation session from 10 a.m. to 6:20 p.m. Negotiations resumed at 10 a.m. on May 19 but failed to reach a conclusion even after midnight on May 20, leading to an adjournment. The Central Labor Relations Commission then proceeded with the third session on the morning of May 20.

Samsung Electronics management's chief negotiator, Yeomyeong Gu, Head of the DS (Device Solutions - Semiconductor Business) People Team, is leaving the negotiation room after expressing his position on the breakdown of labor-management talks at the Central Labor Relations Commission in Sejong Government Complex on the 20th. Photo by Yonhap News.

After finishing the meeting at around 11:40 a.m. on May 20, Chairman Choi told reporters, "The joint investigation team did its best to find common ground during the three days of post-mediation." He added, "We entrusted the process to the Central Labor Relations Commission Chairperson, and as a result, the post-mediation has ended under the Commission's direction." He continued, "At around 10 p.m. on May 19, the union agreed to the mediation proposal put forward by the Commission, but the management expressed its intent to reject it. Even at 11 a.m. on May 20, the management only repeated that 'a decision has been made' and ultimately did not clarify its position." He explained that while the union agreed to the Commission's final mediation proposal during the second post-mediation session the previous day, the management's refusal to agree resulted in a failed settlement.

However, the management explained that it could not accept the union's demands, as they required excessive compensation for divisions that were posting deficits. In a statement on May 20, the management said, "Although the company accepted most of the scale and content of the bonuses, the union did not back down from its demand for a level of compensation for loss-making divisions that would be difficult to justify socially." The management continued, "This directly contradicts the company's fundamental management principle that 'reward should correspond to results.'" The statement also emphasized, "We believe that abandoning this principle would not only harm our company but could also have negative repercussions for other companies and industries."

According to industry sources, labor and management clashed until the final stages over the issue of compensation for deficit-ridden divisions. While the Device Solutions (DS) division, responsible for memory, recorded significant profits overall, the non-memory business units, such as System LSI and foundry (semiconductor contract manufacturing), posted multi-trillion-won losses, which became a problem. The union proposed allocating 15% of this year's operating profit as special bonuses, with 70% going to the DS division and 30% to the memory business unit. During the post-mediation process, there were reports that the distribution ratio was adjusted to 60% for DS and 40% for memory. However, it is said that the union continued to demand an increased share based on operating profit for these divisions.

The union plans to proceed with the strike on May 21 as previously announced. Chairman Choi stated, "The union will legally commence the general strike as scheduled tomorrow," adding, "Even during the strike, we will make it clear that we will not stop our efforts to reach an agreement." However, the management has indicated that it will continue to seek additional mediation and attempt dialogue until the very last moment before the strike. Samsung Electronics stated, "Under no circumstances should a strike occur," and added, "The company will continue its efforts to resolve the issue to the very end, either through additional mediation or direct dialogue with the union."

With the strike expected to begin, there are growing concerns about disruptions to semiconductor production and potential impacts on the global supply chain. The government is also expected to consider invoking its emergency mediation authority in response to the situation.

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