Samsung Electronics Labor and Management Reach Dramatic Agreement on Eve of Strike After 6 Months; 10.5% of Semiconductor Performance to Be Distributed

Dramatic Agreement Reached 90 Minutes Before Strike

Chairman’s Apology and Presidential Intervention Accelerate Breakthrough

Six-Month Dispute Settled After Three Rounds of Post-Adjustment Talks

Memory Division Employees Eligible for Performance Bonuses Up to 600 Million Won

Samsung Electronics management and labor dramatically reached an agreement on performance-based compensation system reforms just 90 minutes before the scheduled general strike. This agreement ends nearly six months of conflict that began with wage negotiations in December 2025, thereby averting the company’s largest strike crisis since its founding. With this agreement, a plan to allocate at least 10% of business performance as a fund for bonuses has been approved, paving the way for employees in the semiconductor (DS) division to potentially receive up to 600 million won in performance bonuses based on an annual salary of 100 million won.

At around 10:40 p.m. on the 20th, Samsung Electronics management and the joint bargaining labor union officially signed the "2026 Performance Bonus Labor-Management Tentative Agreement" at the Gyeonggi Employment and Labor Office in Suwon, Gyeonggi Province. The signing ceremony was attended by Yeomyeong Gu, Vice President and Head of the People Team in the Samsung Electronics Semiconductor (DS) Division, representing management, and Choi Seungho, Chairman of the Samsung Group Super-Enterprise Labor Union Samsung Electronics Branch, representing labor. The agreement was reached through the mediation of Minister of Employment and Labor Kim Young-hoon. Minister Kim stated, "Supporting democracy means believing in the power of dialogue to solve the common tasks before us," and added, "I am grateful that a tentative agreement was reached through voluntary labor-management consultations."

Chairman Choi commented, "This agreement is the result of the tireless efforts and struggle of the Super-Enterprise Labor Union and Joint Action Headquarters over the past six months," adding, "We will do our best to stabilize labor-management relations at Samsung Electronics going forward." Vice President Gu stated, "We will make this tentative agreement a starting point for building a mutually beneficial labor-management culture," and pledged that "the company will faithfully implement the agreed terms." Previously, both sides had failed to reach a resolution after three rounds of post-adjustment meetings and were set to proceed with the planned general strike from this day. However, under active mediation by the Ministry of Employment and Labor and the Central Labor Relations Commission, the parties dramatically reached an agreement after approximately six hours of renewed negotiations. The Samsung Electronics Labor Union Joint Action Headquarters plans to hold a vote of union members on the 2026 wage agreement starting on the 22nd, with voting set to conclude on the 27th.

On the 20th, after concluding the wage negotiations at the Gyeonggi Employment and Labor Office in Jangan-gu, Suwon-si, Gyeonggi-do, Yeomyeonggu, Head of People Team at Samsung Electronics DS (Device Solutions - Semiconductor Business), and Choi Seungho, Chairman of the Samsung Electronics Branch of the Samsung Group Supra-Enterprise Labor Union, signed the tentative agreement and shouted for fighting. Photo by Yonhap News.

Labor and management have continued discussions for about six months since the first wage negotiations on December 16 last year. The main sticking point in the negotiations was the distribution of bonuses for unprofitable business divisions, which created ongoing conflict. However, both sides appear to have found a compromise by making concessions. Analysts believe that the public apology from Samsung Electronics Chairman Lee Jae-yong and pressure from the government influenced the breakthrough. As labor-management tensions peaked recently, Chairman Lee issued an apology to the public, shareholders, and employees on the 16th, after which both sides resumed post-adjustment talks. Subsequently, even President Lee Jae-myung called for an agreement, and through Minister Kim's mediation, both sides drafted the agreement. Had the strike proceeded, the government was even prepared to invoke emergency adjustment powers.

The most notable feature of this agreement is that the existing Over-Profit Incentive (OPI) system will remain in place, while a new "special management performance bonus" will be established for the DS division. This special bonus will use 10.5% of the business performance, as agreed by labor and management, as the total fund, and, with no cap on the payout rate, allows for unlimited rewards based on performance. The bonus pool will be split 40% for the entire DS division and 60% for each specific business unit. For common organizations such as HR and finance, the payout rate is set at 70% of the rate for the Memory Business Unit.

If the business performance criteria agreed upon by labor and management are applied to this year's projected operating profit of about 300 trillion won for Samsung Electronics, a total of 31.5 trillion won will be accumulated solely for the semiconductor special management performance bonus. Based on this, approximately 16 million won per person will be distributed to the DS division’s total workforce of about 78,000 people, regardless of whether their business unit is profitable or not. In addition, approximately 38 million won per person will be given only to the Memory Business Unit, and about 27 million won per person to common organizations, resulting in Memory Business Unit employees receiving close to 60 million won in total performance bonuses.

However, the special management performance bonus will be paid entirely in company stock after tax. One-third can be sold immediately after payment, while the remaining two-thirds will be restricted from sale for one and two years, respectively. Business units operating at a loss this year may not receive OPI, but for the special management performance bonus, it was agreed that 60% of the common payout rate, calculated using division funds, will be guaranteed. However, the implementation for unprofitable business units will be deferred for one year and will apply from 2027 onward.

The special performance bonus system is set to be applied for the next 10 years. However, high performance targets are required for payouts. From 2026 to 2028, the DS division must achieve annual operating profits of 200 trillion won each year, and from 2029 to 2035, annual operating profits of 100 trillion won are required. In addition, for the CL4 (manager level), the payout rate will be adjusted based on performance evaluation results.

Beyond bonuses, significant improvements were also made in wages and welfare benefits. The average wage increase rate for this year was set at 6.2%, with higher salary caps for each job grade, and the wage increases will be retroactively applied from March this year. A new in-house housing loan program was introduced for union members without homes, and childbirth congratulatory payments were expanded to 1 million won for the first child, 2 million won for the second, and 5 million won for the third or more. In addition, extra allowances will be provided for union members working on designated holidays in shift work. Employees in the Device eXperience (DX) division and the CSS Business Team, responsible for finished products, will each receive company stock worth 6 million won as a gesture of encouragement and mutual growth.

Choi Seungho, Chairman of the Samsung Group Supra-Company Labor Union Samsung Electronics Branch, is responding to questions after the third post-adjustment meeting held at the Central Labor Commission of the Government Sejong Complex on the 20th, one day before the announced general strike. Photo by Yonhap News Agency Press Pool.

Although the performance bonus dispute has been settled for now, challenges remain. The most urgent issue is the "labor-labor conflict" within the company triggered by the labor-management dispute. As the union has focused on bonus negotiations for the DS division, they have been relatively less attentive to bonus issues in the DX division, which covers smartphones and home appliances, raising the possibility of fairness issues between divisions. Attention is now focused on whether the agreement will be approved in the union members’ vote by the 27th.

The controversy over performance bonus allocation linked to operating profit also remains unresolved. While labor and management found a compromise this time through the special management performance bonus, some voices have expressed concern that distributing the rapidly increasing operating profit and bonuses unconditionally to employees could pose risks for the company. Especially since the semiconductor boom has led to significant performance improvements, there are concerns that internal debates over the transparency and fairness of the performance distribution standards may continue.

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