Samsung Biologics (207940.KS) has suffered losses of approximately 150 billion won ($110 million) from a union strike, and controversy is growing over what critics call excessive union demands extending into management matters including hiring and mergers and acquisitions (M&A).
According to industry sources Wednesday, the Samsung Biologics labor union included clauses in its collective bargaining proposal requiring prior union consent on core management issues such as new hiring, personnel evaluations, and M&A — provisions that critics say infringe on management rights. Observers say the demands effectively signal the union's intent to run the company.
Specifically, the union is said to have demanded notification of all plans and outcomes related to executive appointments and role changes. It also called for joint resolution with the union on profit-sharing tied to company earnings, new hiring, and personnel assignments. The proposal stipulates that decisions not jointly approved with the union would have no effect. The union further proposed joint deliberation and resolution on broader management matters including company splits, mergers, contract work, and outsourcing. It also requested cooperation in accessing and copying all internal documents and materials needed for union activities upon request.
Industry observers argue the demands go beyond wage negotiations to encroach on management authority. "This proposal from Samsung Biologics is so excessive that even unions in the same industry are shocked to hear about it," one industry official said. "Requiring union consent on everything from hiring to personnel placement, profit-sharing, executive appointments, contract work, and outsourcing is no different from directly participating in management." Another industry official said, "Hiring and investment decisions are directly tied to corporate competitiveness. Making these subject to union consent could chill corporate decision-making."
Choi Joon-sun, professor emeritus at Sungkyunkwan University Law School, said, "The union's job is to protect the interests of its members, while management exists to work for shareholders and the company. The union's excessive demands amount to asking for more power than shareholders who have invested capital. Workers who are paid for their labor seeking to intervene in overall company management goes beyond what workers can legitimately demand."
As the union launched a full-scale strike on Monday with these excessive demands, Samsung Biologics has seen some processes halted and estimates losses reached 150 billion won as of Wednesday. If additional strikes or unexpected production disruptions were to halt all pharmaceuticals currently in production, damages are estimated at 640 billion won. This is equivalent to half of the company's first-quarter revenue (1.2571 trillion won) and exceeds its first-quarter operating profit (580.5 billion won).
Samsung Biologics' labor and management are scheduled to return to the negotiating table Thursday under mediation by the Jungbu Regional Employment and Labor Office, but whether an agreement can be reached remains uncertain. "Responding to the Labor Ministry's mediation even during the strike was part of a sincere effort to resolve matters through dialogue," a Samsung Biologics official said. "The union must stop making unreasonable demands and coercively forcing a strike, and immediately return to the negotiating table with a heavy sense of responsibility."
At a labor-management-government meeting held on the 30th of last month under the Jungbu office's auspices, the two sides failed to find common ground. The union reportedly put forward the condition of "replacing all of management's negotiating committee members" as a prerequisite. In a statement at the time, the union said, "Management informed us in advance that this was not a meeting for discussing agenda items" and "It was not a 'final negotiation' from the outset."
Despite months of negotiations and three days of strikes this month, the two sides have only confirmed their differences. The union has continued negotiations demanding a 14% wage increase, a 30 million won ($22,000) bonus per person, and 20% of operating profit distributed as performance pay, but failed to reach agreement. The company offered a 6.2% wage increase, which the union rejected, prolonging the conflict. Since the union has designated this strike as a "first general strike," additional walkouts are possible if negotiations break down. The union has previously indicated it is keeping open the possibility of renewed strikes.
