Despite 11-Hour Marathon Talks, Samsung Electronics Faces General Strike as Differences Remain Unresolved

Second Post-Adjustment Meeting at the Central Labor Relations Commission Today

Abolition and Institutionalization of Bonus Cap vs. Special Compensation for DS

Will a Dramatic Agreement Be Reached? Resistance from DX Remains a Variable

The labor and management of Samsung Electronics are holding their final round of negotiations over performance bonuses under government mediation. As the labor union has stated that it will proceed with a general strike later this month if negotiations fail, attention is focused on whether both sides can narrow their differences and reach a dramatic agreement this time.

On the morning of May 12, Samsung Electronics labor and management held the second post-adjustment meeting for wage and collective bargaining agreement negotiations at the Central Labor Relations Commission (Central Labor Commission) in the Government Complex Sejong. The previous day, the two sides held the first post-adjustment meeting at the same location from 10:00 a.m. to 9:30 p.m., a total of 11 hours and 30 minutes, but failed to reach a conclusion.

On this day, before entering the second round of negotiations, Choi Seungho, Chairman of the Samsung Electronics Branch of the Super Union, the largest union at Samsung Electronics, told reporters, "We are working to achieve results that satisfy our members," adding, "Regardless of whether the outcome is an agreement or a breakdown, we will do our best." The Central Labor Commission plans to focus on drafting a mediation proposal on this day, reflecting the positions of both sides gathered the previous day. If requested by labor or management and there is room for agreement, the mediation may be extended.

Kim Hyungro, Vice President and Chief Negotiator for Samsung Electronics, is attending the 2nd post-adjustment meeting held on the 12th at the Central Labor Relations Commission in the Government Complex Sejong, Sejong City. Photo by Yonhap News.

The core issue of the post-adjustment meetings is the 'abolition of the performance bonus cap and institutionalization.' According to Samsung Electronics, currently, up to 10% of Economic Value Added (EVA) is paid as a performance bonus, capped at a maximum of 50% of annual salary. The union is demanding the abolition of this cap and the institutionalization of paying about 15% of operating profit as performance bonuses.

On the other hand, the management has stated that it is difficult to accept the formalization of these demands, considering the need to secure resources for future investment. Instead, it has proposed that the Device Solutions (DS) division, the semiconductor business unit, will receive special bonuses that exceed competitor levels if it achieves industry-leading results. In the negotiations held in March, the company even proposed paying up to 75% of annual salary as a performance bonus to the System LSI and Foundry divisions, which had been operating at a deficit, if their results improved.

However, there is a distinction between providing temporary special performance bonuses and institutionalizing the abolition of the performance bonus cap. There are concerns in industry, politics, and academia that if the practice of distributing operating profits as performance bonuses becomes entrenched, it could undermine corporate investment resources and weaken global competitiveness. Previously, as labor-management conflict intensified, company executives stepped in, stating, "We will continue negotiations with an open mind" in an attempt to ease tensions. Nevertheless, it appears unlikely that management will accept the abolition of the performance bonus cap until the very end.

In particular, as the Samsung Electronics Labor Union Together (Donghaeng Union) and the National Samsung Electronics Union (Jeonsamno), both of which have a high proportion of members from the Device eXperience (DX) division, are insisting on 'equal distribution of performance bonuses through company-wide common resources,' the negotiations are expected to face even greater difficulties. Since management has already proposed special compensation for the DS division, it is unlikely to accept a plan to further distribute performance bonuses to other business units such as DX, which have shown weaker results.

Choi Seungho, Chairman of the Samsung Electronics Branch of the Super Union, is attending the second post-adjustment meeting held at the Central Labor Commission in the Government Sejong Complex in Sejong City on the 12th and responding to questions from the press. Yonhap News Agency.

An industry source commented, "If large performance bonuses are distributed to business divisions running a deficit, it breaks the very principle of performance-based pay," and added, "Since the demands of both deficit and surplus divisions are intertwined, negotiations are unlikely to be easy." However, there is still a possibility that management may present additional welfare measures, such as previously proposed increases in base salary, raising the salary cap, and introducing a housing loan system.

Nevertheless, the union continues to maintain a hardline stance. Chairman Choi said in a press briefing the previous day, "We are continuing to demand the payment of 15% of operating profit as performance bonuses and the institutionalization of the abolition of the cap," and added, "If the company has no position on institutionalization, I do not think mediation will be possible." The union maintains that if no agreement is reached during the two days of post-adjustment meetings scheduled through today, it will proceed with a general strike starting on May 21.

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