Labor and management at Samsung Electronics (005930.KS) have failed to reach an agreement after two rounds of post-mediation talks held by the National Labor Relations Commission, unable to bridge their differences over performance bonus criteria. The union declared negotiations broken down, saying "the commission's mediation proposal was actually a step backward from what we had demanded," and announced it would push ahead with a general strike scheduled for the 21st. However, the union's demands — to pay performance bonuses equivalent to 15 percent of operating profit and to abolish the bonus cap of 50 percent of annual salary — border on unreasonable.
With Samsung Electronics' general strike in its final countdown, attention is focused on whether the government will invoke its last resort, the "emergency arbitration" power. Labor Minister Kim Young-hoon, who holds authority over emergency arbitration, drew a line against direct government intervention on a YouTube channel on the 13th, saying, "We must resolve this issue through dialogue in any way possible, without being bound by form." However, with labor relations laws significantly tilted toward the union side, management has few practical defensive measures if the union proceeds with a strike. It is telling that the Cho Kiup Union, Samsung Electronics' largest union, has taken an indifferent stance, saying "lawful industrial action is not a problem."
A strike at Samsung Electronics must be prevented in advance, as its risks could spread beyond the individual company to the Korean economy as a whole. With semiconductors accounting for 46 percent of total exports and half of the stock market capitalization, a Samsung Electronics strike could pour cold water on the recovering growth rate and the upward momentum of the stock market. As the American Chamber of Commerce in Korea has warned, the weakening of Korean companies' market dominance would be inevitable due to customer defections caused by supply disruptions. The union itself has stated that a strike would cause the company 30 trillion won in damages from production disruptions.
Considering the status of the semiconductor industry, its ripple effects, and its share of exports, the damage from a strike would reach the level of a national disaster. The government must actively step in. Given the negative repercussions on the national economy, the government should strongly warn both sides to take a responsible stance, and if coordination still fails, it should consider invoking emergency arbitration, which forcibly suspends industrial action and orders mediation. The most recent invocation of emergency arbitration was during the airline pilots' strike in 2005. Given the gravity of the matter, invoking emergency arbitration for a Samsung Electronics strike cannot be considered excessive. Management should present a long-term compensation system that does not undermine competitiveness to persuade the union again, while the union must show a forward-looking change in attitude for coexistence.
