For the first time in its history, South Korean electronics behemoth Samsung Electronics faces a labor strike. The company’s largest labor union, the National Samsung Electronics Union (NSEU), has been talking about walking off the job next week, reports say, after months of stalled wage negotiations and mounting frustration among workers.
The NSEU, which represents more than 28,000 workers, or 22% of Samsung’s total workforce, held a livestreamed press conference on Wednesday and officially announced the plans to hold a nationwide strike next week, on June 7th. Members are calling for a 6.5% wage increase, an extra day of annual leave, and a more disclosure about the company’s bonus for performance system. Samsung had previously proposed a 5.1% wage hike.
The two sides have been at odds for weeks, with employees holding demonstrations outside Samsung’s headquarters in Seoul and its chip factory in Hwaseong. The plans to go on strike came after the union and company management held negotiations, in which Samsung reportedly refused to come up with a mediated compromise plan.
The move is a surprising one, given the union’s stature. Up until 2020, Samsung was notorious for its aggressive anti-union activities. But in the face of recent legal challenges and mounting public pressure, the company changed its stance. The NSEU has been rapidly gaining members, especially in the semiconductor sector, where employees complained that they hadn’t been paid according to their value.
For investors, the specter of a strike is not a good thing: Samsung stocks plummeted following the news. The company said in a statement that it will keep the communication channels open, but the union said that Samsung’s management, including Chairman Lee Jae-Yong, must take more “active measures” to come up with a reasonable deal.
As a backdrop to the labor dispute, the strike will take place even as the conglomerate announced a nearly tenfold rise in operating profits for the first quarter, year over year. The company credited the growth to a recovery in chip prices as well as “strong demand” for generative AI.
The historic labor action could pose a serious challenge to the company’s production and the broader chip supply chain. Now, it’s a matter of whether the sides will find common ground before next week’s strike.
