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Over 6,500 Samsung workers walk off assembly lines over pay, vacation time

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Over 6,500 Samsung workers walk off assembly lines over pay, vacation time

“Our goal for this walkout is to disrupt production,” said union leader Son Woo-mok. (Photo: Bloomberg)

5 min read Last Updated : Jul 08 2024 | 8:56 AM IST


By Jenny Lee, Yoolim Lee and Sohee Kim

More than 6,500 Samsung Electronics Co. workers walked off the job Monday to stage a rally demanding better pay, beginning the biggest organised labor action in the South Korean conglomerate’s half-century history.

 


Disgruntled employees and union supporters gathered in the pouring rain outside one of Samsung’s biggest chipmaking complexes south of Seoul. Wearing red headbands proclaiming “total strike” and black raincoats, they chanted slogans and sang songs with raised fists. Union leaders, who provided the initial tally of participants, hope the highly publicised protest galvanises a three-day walkout that will send a message to Korea’s biggest company.


Samsung’s largest union has spent weeks preparing for the walkout, after negotiations over pay and vacation time collapsed last month. This envisioned action marks an escalation from a single-day strike in early June — the first in Samsung’s 55 years of existence. It’s intended to send a message by disrupting production at one of the company’s most advanced chip facilities, union leaders say.

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The labor union had aimed to gather up to 5,000 people for the rally outside Samsung’s facility in Hwaseong, about 38 kilometers (24 miles) south of Seoul, Lee Hyun-kuk, deputy secretary-general of the union, told Bloomberg News on Friday. It’s unclear how many workers will actually walk off the job over the ensuing days, and markets have so far remained calm. The company’s shares remained largely unchanged Monday morning.


Still, the risk is that the unprecedented action at Samsung may hurt the country’s best-known and wealthiest corporate name — and spur similar responses across the tech industry. Many of those who turned out Monday were chip assembly line workers, according to the union.


“Our goal for this walkout is to disrupt production,” said union leader Son Woo-mok. 


For Samsung, it can ill-afford turmoil within its ranks — or production snarls — at a critical time. It’s now pulling out the stops to convince Nvidia Corp. to use its high-end AI memory chips — a prerequisite for staking a larger claim on a booming AI market. In May, it abruptly replaced the head of its semiconductor division, which since 2023 has seen SK Hynix Inc. dominate the crucial high-bandwidth memory, or HBM, chip arena.


This week, Samsung’s preparing to unveil new foldable phones and watches as well as a smart ring in Paris ahead of the Olympics, in an attempt to forestall a challenge from Apple Inc. on its global market lead. In Samsung’s favor however is an anticipated rebound in global memory and electronics demand from historic post-Covid era depths: the company on Friday posted a 15-fold surge in earnings, but off a very low 2023 base.


Representatives for Samsung have declined to comment since Friday.

“The timing of this strike is particularly critical as it coincides with ongoing semiconductor supply chain challenges,” said Billy Leung, an investment strategist at Global X Management Co., a member of the Mirae Asset Financial Group. Samsung accounts for about 20% of the global DRAM market and around 40% of NAND flash, which is used in smartphones and servers. “Any disruption in Samsung’s operations could have a ripple effect.” 


Samsung Electronics has long avoided the kind of ground-up turmoil that’s plagued many of Korea’s leading companies from Hyundai Motor Co. to Ssangyong Motor Co. Labor action in the past has occasionally turned violent. Analysts have credited Samsung’s tight control of labor activism as a reason for its success, helping the company dominate the electronics sector from its perch in Suwon for well over a decade. Lee Kun Hee, late chairman of Samsung and father of current leader Jay Y. Lee, went to great lengths to prevent unions from forming. 


Now, the National Samsung Electronics Union — the largest of the tech giant’s several unions with some 30,000-plus workers — says it’s escalating things because of a breakdown in pay talks, after initially seeking a less dramatic resolution.


Union leaders spent weeks encouraging members to join in the impending maneuver. Samsung on Thursday tried to deflate that endeavor by announcing first-half performance-related bonuses for semiconductor staff, but the maximum 75% of monthly salaries they promised fell short of a full-month’s payout typical in the past.

“Because executives are on contract, they mostly care about short-term performance and goals,” said Park Seol, a 35-year-old woman who works at Samsung’s Pyeongtaek complex. “We stand up for what is best for the company.”


At the heart of the dispute now are higher wages and additional paid leave. Union leaders last week changed their demands to include their entire cohort after initially saying they wanted a bigger salary increase for around 855 staff who didn’t agree to a 3% annual basic pay hike. 


Other issues include bonuses tied to Samsung’s excess profit, which chip workers didn’t receive last year when their unit lost about 15 trillion won. They fear they may get left out again this year even if the division returns to profit, according to union leaders. 


Samsung calculates those bonuses via a complex formula that deducts cost of capital from operating profit, adjusted for taxes on a cash basis. The union said it’s asking the company to simply 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.

First Published: Jul 08 2024 | 7:49 AM IST

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