Crisis averted – Samsung workers approved a new pay deal that will see 10.5% of the company’s semiconductor operating profit be distributed as special bonuses towards workers in Samsung’s chip businesses.
Here’s the quick backstory. Samsung was facing the biggest worker strike in its history after employees in Device Solutions (memory, chipsets and fabs) became unhappy with the size of bonuses they were receiving compared to their peers at rival SK Hynix. The government stepped in and the workers union suspended the planned 18-day strike while negotiations took place between May 22 and 27.
In that time, Samsung and the workers union hammered out a new agreement. The workers voted and accepted the deal with a big margin – 74% voted in favor.
Now some workers in Samsung’s memory division will receive bonuses as high as $416,000 this year. The average salary in South Korea is around $32,000, so this is absolutely massive. Workers in the other two semiconductor divisions will also receive big bonuses, though not quite that big.
To put things in context, Samsung accounts for almost a quarter of South Korean exports. And the company’s memory business is crucial to the global electronics industry. The Prime Minister had estimated that if the 18-day strike had gone through, it would have amounted to KRW 1 trillion (around $660 million) in losses.
With the deal approved by the union, all is good now, right? Well, no. First, shareholders are not happy because the deal wasn’t approved at a shareholders’ meeting and, worse, these terms will reduce the money that gets distributed to said shareholders.
But Samsung also has to worry about the sentiments among its other workers. The union that represents the semiconductor divisions got what it asked for. However, the union that represents the electronics division left the negotiating table due to disagreements – this union is now asking a court to block the vote (electronics workers did not take part in the vote). Workers in other parts of the Samsung conglomerate will receive much smaller bonuses than their fellows that work on the semiconductor side of things.
