Samsung Workers’ Strike: A Major Labor Action in South Korea

Over 6,500 workers at Samsung Electronics Co. walked off the job on Monday, demanding better pay and vacation time, marking the largest organized labor action in the company’s 55-year history. The strike began with a rally outside one of Samsung’s biggest chipmaking complexes, where employees and union supporters gathered in the rain, chanting slogans and singing songs with raised fists.

The labor union, which represents over 30,000 workers, has been preparing for this action for weeks. The strike is an escalation from a single-day strike in early June and aims to disrupt production at one of the company’s most advanced chip facilities. Union leaders hope the highly publicized protest will send a message to Korea’s biggest company and galvanize a three-day walkout.

The strike is a result of collapsed negotiations over pay and vacation time. Samsung’s largest union had aimed to gather up to 5,000 people for the rally, but the actual number of workers who walked off the job is unclear. Despite the uncertainty, the company’s shares remained largely unchanged on Monday morning.

The strike poses a risk to Samsung’s reputation and could lead to similar responses across the tech industry. Many of those who turned out on Monday were chip assembly line workers. Union leader Son Woo-mok said, “Our goal for this walkout is to disrupt production.”

Samsung is currently facing a critical period, as it is trying to convince Nvidia Corp. to use its high-end AI memory chips and is preparing to unveil new products ahead of the Olympics. The company’s success has been attributed to its tight control of labor activism, which has helped it dominate the electronics sector.

However, the National Samsung Electronics Union is escalating the strike due to a breakdown in pay talks. Union leaders spent weeks encouraging members to join the action, and Samsung tried to deflate the effort by announcing first-half performance-related bonuses for semiconductor staff. The maximum 75% of monthly salaries promised fell short of a full-month’s payout typical in the past.

The dispute centers around higher wages and additional paid leave. Union leaders initially sought a bigger salary increase for around 855 staff who didn’t agree to a 3% annual basic pay hike. The union is also demanding bonuses tied to Samsung’s excess profit, which chip workers didn’t receive last year when their unit lost about 15 trillion won.

Samsung calculates bonuses via a complex formula that deducts cost of capital from operating profit, adjusted for taxes on a cash basis. The union is asking the company to use operating profit like some of its peers or to be more transparent in how it determines those numbers. Historically, bonuses make up a significant portion of worker pay, so missing out can mean a meaningful reduction in compensation.

The strike is a significant event in South Korea, and its outcome could have a ripple effect on the global tech industry. Analysts have credited Samsung’s tight control of labor activism as a reason for its success, but the company’s labor practices are now under scrutiny. The timing of the strike is critical, as it coincides with ongoing semiconductor supply chain challenges.

Historical Context:

Samsung Electronics Co. has a long history of labor disputes, but this strike marks a significant escalation in the company’s 55-year history. In the past, Samsung has been known for its tight control of labor activism, which has helped it dominate the electronics sector. However, the company’s labor practices are now under scrutiny, and the strike is a major labor action in South Korea.

The strike is a result of collapsed negotiations over pay and vacation time, which is a common issue in South Korea’s labor market. The country has a high level of unionization, with around 15% of the workforce belonging to a union. However, labor disputes are relatively rare, and the strike is a significant event in the country’s labor landscape.

The strike is also significant because it coincides with ongoing semiconductor supply chain challenges. The global tech industry is facing a shortage of semiconductors, and Samsung is one of the largest chipmakers in the world. The strike could disrupt production and have a ripple effect on the global tech industry.

Summary in Bullet Points:

• Over 6,500 workers at Samsung Electronics Co. walked off the job on Monday, demanding better pay and vacation time. • The strike is the largest organized labor action in the company’s 55-year history and is an escalation from a single-day strike in early June. • The labor union, which represents over 30,000 workers, has been preparing for this action for weeks and aims to disrupt production at one of the company’s most advanced chip facilities. • The strike is a result of collapsed negotiations over pay and vacation time, with union leaders seeking higher wages and additional paid leave. • Samsung tried to deflate the effort by announcing first-half performance-related bonuses for semiconductor staff, but the maximum 75% of monthly salaries promised fell short of a full-month’s payout typical in the past. • The dispute centers around higher wages and additional paid leave, with union leaders initially seeking a bigger salary increase for around 855 staff who didn’t agree to a 3% annual basic pay hike. • The union is also demanding bonuses tied to Samsung’s excess profit, which chip workers didn’t receive last year when their unit lost about 15 trillion won. • The strike is a significant event in South Korea and its outcome could have a ripple effect on the global tech industry. • The timing of the strike is critical, as it coincides with ongoing semiconductor supply chain challenges. • The strike poses a risk to Samsung’s reputation and could lead to similar responses across the tech industry.