Samsung Electronics' (005930.KS) labor union is set to hold a press conference on the 17th to officially declare its status as a majority union and renew pressure for bonus payments exceeding 40 trillion won ($29 billion). On the 23rd, the union plans to hold a rally at the Pyeongtaek Campus and is threatening a general strike from May 21 to June 7 if negotiations over bonuses and other issues fail to reach an agreement.
Samsung Electronics' union has approximately 75,000 members. The semiconductor division accounts for 80% of that total, or about 55,000 members. The union is demanding 40.5 trillion won — equivalent to 15% of this year's projected 270 trillion won in semiconductor operating profit — as bonus payments. Under this arrangement, memory division employees would each receive an average bonus of 620 million won. The Samsung Electronics union appears to have taken cues from SK hynix (000660.KS), which last year agreed to pay 10% of operating profit as bonuses. If SK hynix, expected to post 190 trillion won in operating profit this year, pays out 19 trillion won in bonuses, average employee bonuses would reach 560 million won.
It must be pointed out that the Samsung Electronics union's mindset reflects a shortsighted "look out for number one" approach that fails to consider corporate competitiveness or public perception. The 40 trillion won in bonuses exceeds Samsung Electronics' 37.7 trillion won in research and development (R&D) investment last year and is four times the 11.1 trillion won in dividends paid to 4 million shareholders. Compared with major mergers and acquisitions (M&A) such as Samsung's 2016 acquisition of Harman (9 trillion won) and SK hynix's acquisition of Intel's NAND business (10.3 trillion won), the figures reveal just how detached from reality the union's demand is.
Samsung Electronics is a core company that virtually underpins the entire Korean economy across all fronts — exports, current account balance, employment, and corporate taxes. This is precisely why the government has extended tax benefits and infrastructure support including water and electricity, and why the National Assembly passed the Semiconductor Special Act to bolster competitiveness. No one can fault efforts to provide fair compensation for the dedication and hard work of semiconductor employees. However, the union's demand for "super-gap bonuses" that undermine corporate competitiveness warrants serious reflection. A rational approach is required from the union, one that takes into account conflicts among Samsung Electronics' business divisions, the relative sense of deprivation among materials, parts, and equipment companies, and the deepening polarization of the labor market.
