Nam Hyun-woo has worked as a staff writer at The Korea Times since 2013, mostly covering business and politics. He currently belongs to the Business Desk where he covers topics such as emerging tech, AI, ICT and Korea's chaebol community. Prior to joining the team, he was the paper's correspondent for the presidential office of Korea during the Yoon Suk Yeol and Moon Jae-in administrations.
Samsung union members begin vote on tentative agreement
People enter Samsung Electronics headquarters in Suwon, Gyeonggi Province, Friday, the same day its labor unions began voting on a tentative wage agreement. Yonhap
By Nam Hyun-woo
Conflict intensifies between memory, foundry and device employees
Members of Samsung Electronics’ labor unions began mobile voting on a tentative agreement reached between their leadership and management, the final phase before the two sides’ labor dispute is settled.
According to the unions, approximately 87,000 members of Samsung Electronics Labor Union (SELU) and National Samsung Electronics Union (NSEU) began casting their votes on the tentative agreement at 2 p.m. Friday. The voting will continue for six days until 10 a.m. Wednesday.
The tentative agreement will be finalized if a majority of union members eligible to vote participate in the ballot and more than half approve it. If the agreement fails to win majority support, it will be rejected and labor and management will have to go back to the negotiating table.
The agreement, reached Wednesday just hours before the unions were to launch a general strike, centers on distributing part of the company’s operating profit to employees as performance bonuses.
The bonus system consists of two categories. The first is Samsung’s existing overall performance incentive (OPI). The agreement states that the company will use 10 percent of operating profit as a pool while maintaining a payout cap of 50 percent of an employee’s annual salary.
Before the agreement, the company calculated the bonuses using a formula based on Samsung’s own metric, based on an economic value-added formula, which the unions have criticized as lacking transparency. Under the new agreement, the company’s Device Solutions (DS) semiconductor division will use operating profit instead, while the non-semiconductor division, the Device Experience (DX) division, will be allowed to choose between the existing formula and operating profit.
The second category is a “special management performance bonus” exclusively for the DS division. The agreement states that the bonus will be funded with 10.5 percent of a “jointly selected business performance indicator,” which the unions later confirmed refers to operating profit.
The bonus will be paid in the company’s treasury shares, with some of the shares subject to a lock-up period, but there will be no payout cap. Forty percent of this bonus will be distributed equally across the entire DS division, while the remaining 60 percent will be allocated differentially, based on each business department’s performance. Loss-making businesses will receive only 60 percent of the equally distributed portion, although the two sides agreed to suspend the penalty for one year.
Under this structure, employees from the memory chip business of the DS division could receive bonuses of up to around 600 million won ($398,900) this year.
Leaders of Samsung Electronics Company Union, a minor labor union mostly comprised of the company's non-semiconductor division, speak during a press conference at the company's headquarters in Suwon, Gyeonggi Province, Friday. Yonhap
Industry officials said the agreement is likely to pass the vote, given that a significant portion of union members are from the DS division, the negotiations have already dragged on for more than six months and rejecting the deal would send the talks back to square one without any gains.
However, union members from the foundry, chip-designing System LSI and DX divisions called for the agreement to be voted down, because it is seen as being particularly favorable to the memory business, which generated most of the company’s operating profit in the first quarter of the year.
The unions had initially demanded that 70 percent of the DS division’s performance bonus pool be distributed equally across all departments, but compromised on the demand during the negotiation process.
On SELU’s website, one member wrote that they would vote against the agreement because the leadership abandoned the promise to “bring all DS divisions, including foundry, together.” Another member, claiming to be from the DX division, said “SELU should rename itself the DS union,” and that the union is “representing only the interests of certain employees and union members.”
While employees in the memory business could receive up to 600 million won in bonuses, employees in the foundry and System LSI divisions are likely to receive around 210 million won. DX division employees, meanwhile, may receive only around 6 million won in treasury shares, as weak business performance this year could leave them no OPI payouts.
Reflecting this, membership at Samsung Electronics Company Union (SECU), which is mostly comprised of DX division employees, has sharply increased since Thursday, apparently as employees seek to express their dissatisfaction through the vote.
SECU, which declared its intention to pull out of the joint negotiation coalition on May 4, claims that SELU instructed it to prepare for the vote after the agreement was reached and that it had been preparing to participate in the ballot. SELU, however, argues that SECU had already withdrawn from the coalition by the time the tentative agreement was signed and therefore has no voting rights, leading to conflict between the two sides.
During a press conference at the company’s headquarters in Suwon, Gyeonggi Province, Friday, SECU said, “a rushed and poorly negotiated tentative agreement was signed,” adding that “the agreement was signed while turning away the wishes of the majority of union members. Membership in the companion union increased by 10,000 in a single day. This is a stern warning against SELU.”