Samsung Electronics labour union in South Korea to vote on tentative wage agreement

Samsung Electronics and its South Korean labour union reached a preliminary pay deal on Wednesday, averting a planned lengthy strike that threatened to disrupt the production of AI and other chips. The labour union said it had decided to suspend the general strike and put the tentative agreement to a vote by union members.

The vote will take place from May 23 to May 28, as revealed on the union’s website. Over 47,000 workers were preparing to walk off the company’s production lines on Thursday after negotiations between the workers’ union and the company, mediated by the South Korean government, broke down.

These workers, who comprise around 40% of the company’s workforce, were set to strike for 18 days, which could have disrupted production at one of the world’s largest chipmakers. The company has seen profits surge amid the AI boom.

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Performance bonuses were a key reason behind the dispute. As reported by CNBC, workers demanded a revision of the company’s performance-based bonus system. Samsung had capped these bonuses at 50% of workers’ salaries. The workers also demanded 15% of operating profits.

Reports suggest employees believe the company is not adequately sharing the profits generated during the AI-driven boom. Workers have also pointed to SK Hynix, one of the world’s second-largest memory chipmakers after Samsung. The firm reportedly removed its 10-year cap on bonus pay last year and has allocated around 10% of annual operating profit to employee performance bonuses.

In the past, Samsung had refused to remove the bonus limit, instead offering employees a one-time bonus this year. The company offered memory chip employees higher bonuses than their counterparts at SK Hynix, while employees in the logic chip and foundry businesses were set to receive performance-based bonuses ranging from 50% to 100% of their annual salary.