With just over a week remaining before Samsung Electronics' (005930.KS) union-declared general strike, the situation is heading toward disaster as the union has rebuffed last-ditch dialogue efforts from the government and the company. The National Labor Relations Commission (NLRC) proposed a mediation plan that would effectively enable a performance bonus payout of 40 trillion won, but the union rejected it. With the strike now imminent and threatening to paralyze the semiconductor industry—a core pillar of the Korean economy—the business community is preparing a statement urging the government to invoke its emergency arbitration authority.
According to industry sources on Thursday, the NLRC presented a review plan to both management and the union in post-dispute mediation that broke down on the 13th, proposing to maintain the existing Overall Performance Incentive (OPI) system while adding a special award for the Device Solutions (DS) division. The NLRC's proposal was to put this plan to a vote by union members. The special award specifically calls for allocating 12 percent of operating profit as a funding source if the DS division achieves the industry's top rank in both revenue and operating profit, with the allocation split 7 to 3 between division-wide and business-unit portions.
With Samsung Electronics' DS division operating profit this year expected to reach at least around 300 trillion won and to secure the industry's top position, the special award alone is estimated to reach 36 trillion won. Combined with last year's DS division OPI total of 4 trillion won, this would mean a staggering 40 trillion won in performance bonuses to be paid this year alone. The NLRC also partially accepted the union's "institutionalization" demand by stipulating that similar arrangements would continue to apply if comparable business performance is achieved in the future.
The union spurned the proposal. Choi Seung-ho, chairman of the Samsung Electronics branch of the super-enterprise union, disclosed the process through the union members' community, saying, "The NLRC spouted 'nonsense,' asking whether we could put it to a member vote even without a tentative agreement," and lambasted it in raw terms as "a lost cause." Critics say the chairman unilaterally derailed the government's efforts to broker a resolution through dialogue.
As differences between labor and management failed to narrow, the NLRC and the company are straining to keep the channels of dialogue open. The NLRC officially proposed on the same day to "resume the second post-dispute mediation meeting on the 16th for a peaceful resolution between labor and management." Samsung Electronics also sent an official letter to the union the same day, requesting additional negotiations, saying, "Since agreement was not reached in post-dispute mediation, we propose that labor and management engage in direct dialogue."
The union has put forward a conditional acceptance stance. The union sent an official letter to the company on the same day stating that dialogue would be possible if Jun Young-hyun, CEO of the DS division, personally presents concrete proposals by 10 a.m. on the 15th on three core agenda items: △OPI transparency △abolition of the cap △institutionalization. The core demands are the fixed allocation of 15 percent of operating profit and the codification of abolishing the performance bonus ceiling set at 50 percent of annual salary. Meanwhile, management remains stalled in dialogue, concerned that fixing the bonus standard would reduce future investment capacity and widen compensation gaps.
With labor and management running on parallel tracks and an unprecedented 18-day strike from the 21st of this month through the 7th of next month drawing near, a sense of nationwide crisis has reached its peak. The six major business organizations are expected to issue an emergency joint statement next week urging Samsung Electronics' union to withdraw the strike. They plan to specify the government's invocation of emergency arbitration authority as a core demand in the statement. Emergency arbitration, under Article 76 of the Trade Union Act, is a last-resort measure invoked by the Minister of Employment and Labor when industrial action threatens significant harm to the national economy. Upon invocation, strikes are immediately banned for 30 days and compulsory arbitration proceedings begin.
Concern is also spreading across various sectors of society. The American Chamber of Commerce in Korea (AMCHAM) and the Samsung Electronics Shareholder Action Committee have already issued statements calling for the strike's withdrawal, and academic circles including the Korean Academy of Management are discussing opposition statements. Even foreign news outlet Reuters pointed out that "this strike is raising the risk of threatening the foundations of the Korean economy."
