Renewed performance bonus negotiations between Samsung Electronics (005930.KS) and its labor union, mediated by the National Labor Relations Commission (NLRC), have ended without agreement. The Samsung Electronics union is now counting down to the second full-scale strike in the company's history, effectively bracing for a complete breakdown in talks. Should the nation's largest industrial operation — its semiconductor plants — come to a halt, damage to the national economy, including declining exports and slowing regional economies, would be unavoidable.
According to the government and industry sources on Wednesday, the NLRC announced that it had concluded its meeting on the final day of post-mediation proceedings. The session ran for approximately 17 hours, from 10 a.m. the previous day until 3 a.m. on Wednesday.
During the closed-door meeting, the union reportedly demanded that the performance bonus system be codified, with a certain percentage legally guaranteed to enhance transparency and predictability.
At the heart of the union's demand is the argument that an amount equivalent to 15 percent of Samsung Electronics' annual operating profit should be allocated to performance bonuses. The union maintained that this system would reduce volatility tied to business performance and ensure stable compensation for employees. Under the union's proposal, roughly 51 trillion won out of this year's expected operating profit of 340 trillion won would need to be paid out as performance bonuses.
Samsung Electronics' management, however, balked at the union's demands. The company proposed on Wednesday to maintain the existing Overall Performance Incentive (OPI) system based on Economic Value Added (EVA), while offering a one-time special management performance bonus limited to the semiconductor (DS) division this year. To narrow the gap with the non-memory business unit, the company also proposed structuring the special bonus with 70 percent from division funds and 30 percent from business unit funds.
After receiving this proposal, the union requested that the NLRC halt post-mediation proceedings. The union's position was that an operating-profit-based performance bonus reform should be institutionalized, while the company limited its offer to this year only.
Choi Seung-ho, chairman of the Samsung Electronics chapter of the Super Enterprise Union, told reporters around 3 a.m. Wednesday, "We have maintained the same position for five months, but our agenda was not clearly accepted." He added, "Separate discussions with the company are not currently in our plans." Choi reiterated the union's determination to proceed with a full strike, saying, "Even if the injunction the company filed with the court is granted, we plan to carry out lawful industrial action as the Samsung Biologics union did."
The NLRC also attempted mediation, warning that if the union's demands were accepted, South Korea's overall wage structure could face severe disruption and that polarization between large and small businesses, as well as the dual structure of the labor market, could worsen. It also urged management to accept the union's views and recommended an additional compensation plan for the memory business unit, which has delivered the strongest performance, in an effort to find common ground. However, with the union requesting a halt to post-mediation, the process ended without a formal mediation proposal being presented.
In the end, the two sides failed to find common ground, and the renewed negotiations collapsed. "The proposal the company presented 12 hours after we requested a mediation plan was actually a setback," Choi said. "They offered a special management performance bonus limited to the DS division for 2026 only, without codifying it."
Regarding the 18-day full strike set to begin on the 21st of this month, Choi explained, "As of today, participation stands at around 41,000 people. Given the company's proposal, we expect more than 50,000 members to join."
A full strike would inevitably inflict serious damage across the economy, including an estimated 30 trillion won in production losses, customer defections, and harm to suppliers. Against this backdrop, some observers suggest the judiciary could put the brakes on the union's full strike. On the 16th of last month, Samsung Electronics filed an injunction with the Suwon District Court seeking to block what it called unlawful strike action by the union.
Current labor law prohibits ▲ interference with the normal operation of safety protection facilities (Article 42, Paragraph 2) ▲ suspension of work to prevent equipment damage and deterioration of raw materials or products (Article 38, Paragraph 2) ▲ occupation of key business site facilities such as production lines (Article 42, Paragraph 1) ▲ coercion to participate in industrial action through intimidation (Article 38, Paragraph 1).
The company's position is that if the union occupies the semiconductor production lines and operations are suspended, memory output supplied to key customers such as Nvidia and AMD would fall, causing massive damage, and a ban on industrial action is therefore essential. In particular, restarting semiconductor equipment such as extreme ultraviolet (EUV) lithography machines — which can cost up to 500 billion won per unit — after a single shutdown requires complex recovery procedures that can take months, with enormous damage expected.
In 2007, a four-hour power outage at Samsung Electronics' Giheung site caused approximately 40 billion won in damage. In 2018, the Pyeongtaek site suffered about 50 billion won in losses even though the outage lasted less than 30 minutes. If the court takes these factors into account and grants the company's injunction request, the immediate crisis could be averted.
The Suwon District Court is set to hold its second hearing on the injunction request on Wednesday. The court plans to reach a conclusion before the strike's start date on the 21st.
The problem is that even a court order cannot fully halt the union's full strike. The union can proceed with the strike while keeping only essential personnel, as recognized by the court, on the production lines. "Essential maintenance personnel account for only 5 percent of the total, or 10 percent at most," an industry official said. "Once the full strike begins, production disruptions will be unavoidable."
For this reason, a scenario in which the government invokes its "emergency mediation authority" is also being discussed. Samsung Electronics accounts for 37.1 percent of South Korea's total exports. If its production lines stop, it would lead to catastrophic losses for the national economy and overall exports. Emergency mediation authority is a coercive measure under which the government halts a full strike by its own authority to prevent such situations.
Under Articles 76 and 77 of the current Trade Union and Labor Relations Adjustment Act, the Minister of Employment and Labor may invoke emergency mediation authority "when industrial action poses a clear and present danger of significantly harming the national economy or endangering the daily lives of the people." Once emergency mediation is invoked, the union must immediately halt industrial action and cannot resume it for 30 days.
However, it remains uncertain whether the politically burdensome emergency mediation authority will actually be invoked. It is a system under which the government directly intervenes in labor-management issues to adjust interests. If mediation unfavorable to the union is handed down, it could provoke backlash from more than 120,000 Samsung Electronics employees and their families ahead of the local elections in June. In fact, emergency mediation authority has been invoked only four times in history: ▲ the 1969 Korea Shipbuilding Corporation strike ▲ the 1993 Hyundai Motor union strike ▲ the 2005 Asiana Airlines pilots' strike and ▲ the Korean Air pilots' union strike.
"The fact that even the Ministry of Employment and Labor's emergency mediation is being discussed means labor-management relations have deteriorated significantly," Choi said.
