Wage negotiations between Samsung Electronics (005930) and its labor union have collapsed as the union refused to back down from its demand to abolish the performance bonus cap.
The removal of bonus caps, adopted by SK Hynix, would create equity issues among Samsung Electronics' diverse business divisions and weaken investment capacity, yet the union continues to press its demands.
Samsung Electronics told employees on the 4th: "We regret that we failed to reach a final agreement despite eight rounds of main negotiations since last December, six days of intensive bargaining, and mediation procedures."
The company pointed to the union's repeated demands to abolish the ceiling on its Overachievement Performance Incentive (OPI) as the reason for the breakdown.
Management and the union's joint bargaining committee entered mediation procedures with the National Labor Relations Commission after failing to narrow differences, but those talks also collapsed the previous night. The union is demanding elimination of the bonus cap, transparency in bonus calculation criteria, and a 7% wage increase.
Samsung offered to accept demands for bonus calculation transparency while proposing a 6.2% wage increase—higher than last year's 5.1%. Additional offers included 20 company shares for all employees, higher salary caps by job grade, housing loans up to 500 million won, 1 million points for the company mall, and childbirth bonuses up to 5 million won. For semiconductor (DS) division employees, an additional 100% OPI payment was offered upon achieving 100 trillion won in operating profit.
Despite these unprecedented offers, negotiations collapsed as the union held firm on removing the bonus cap.
"Excluding the memory semiconductor division, most business units realistically cannot achieve OPI targets and would inevitably feel relative deprivation," a Samsung official said.
Industry observers warn that uncapped bonuses could reduce R&D investment funds and undermine Samsung's technological competitiveness. Semiconductors require massive and timely R&D and facility investments; large bonus payouts could drain resources needed for future investment.
Critics say the union is excessively inflaming labor-management conflict, noting it sent members an email claiming "a strike would cost the company 10 trillion won while employees would lose only 400 billion won."
The joint bargaining committee announced it would "transition to a joint struggle headquarters structure and begin procedures to secure the right to strike," with plans to announce strike-related measures including a vote on the 5th.