Samsung strike averted as labor, management reach tentative deal

Samsung Electronics’ labor union has held off on a strike slated for Thursday after it reached a tentative deal with management in a dramatic last-minute turnaround.

The company’s labor coalition made the announcement at around 10:30 p.m. Wednesday, about 90 minutes before the strike deadline, after labor and management reached a consensus on bonus distribution.

The planned walkout, initially scheduled to run through June 7, could cost the company up to 100 trillion won ($66.4 billion) in losses and disrupt chip production, should no agreement be reached.

There had been little sign of a breakthrough until around 4 p.m. the same day, when the labor minister directly stepped in to mediate between management and the labor union.

“I sincerely thank both labor and management at Samsung Electronics on behalf of the government for not giving up on dialogue until the very end and reaching a tentative agreement through negotiations,” said Labor Minister Kim Young-hoon as he stepped out of the Gyeonggi District Employment and Labor Office, where the negotiators held talks for over six hours.

The union coalition notified members that “the general strike scheduled for May 21 through June 7 will be suspended until further notice,” while urging all members to participate in a vote on the tentative agreement set to run from Saturday to Thursday.

Samsung Electronics welcomed the decision. 

"The agreement, though belated, came thanks to the support of the public, shareholders and customers, the government’s tireless mediation efforts and employees who steadfastly remained at their posts," the company said in a statement.

Under the tentative agreement, the pool of a new bonus will be funded by 10.5 percent of mutually agreed upon business performance, with no cap placed on payout amounts. Labor initially pushed for a 15 percent allocation of operating profit without a cap, while management maintained its position of 10 percent with an existing payout ceiling. 

Another flashpoint involved how bonuses are distributed across Samsung's three different semiconductor units, which cover memory, chip manufacturing and chip design. Of the three, only the memory business was profitable as of the first quarter. The agreed proposal allocates 60 percent of the bonus pool to any profit-making division, while setting aside the remaining 40 percent for the entire semiconductor division called Device Solutions. 

Still, the ratio will be implemented beginning in 2027, seemingly a compromise aimed at appeasing the union, which had insisted on equal distribution regardless of profitability.

BY PARK EUN-JEE, LEE JAE-LIM [park.eunjee@joongang.co.kr]