Samsung, union hold final mediation amid looming possibility of last-minute deal

Choi Seung-ho, left, head of Samsung Electronics' largest labor union, enters the National Labor Relations Commission office in Sejong, Tuesday. Yonhap

Samsung Electronics and its largest labor union resumed government-led wage mediation Tuesday, with the looming possibility of reaching a last-minute deal to avert a strike at the world's largest memory chipmaker.

The last day of the two-day negotiations resumed days after the first round of mediation ended without a deal, as the two sides remained divided over performance-based bonuses ahead of an 18-day strike set to begin Thursday.

Park Soo-keun, chairman of the National Labor Relations Commission, said the two sides were still at odds over several issues but acknowledged there was still some possibility of reaching an agreement.

"Both labor and management are making concessions," Park said, adding that one or two key issues have yet to be resolved.

Labor and management remain sharply split over performance-based bonuses tied to earnings from the tech giant's artificial intelligence (AI)-related semiconductor business, amid an ongoing global memory supercycle.

The company has proposed maintaining the current excess profit incentive system while allowing the bonus pool to be calculated based on 10 percent of operating profit. It also proposed introducing a special compensation system, saying it would create a more flexible incentive structure.

In contrast, the union is demanding fixed performance bonuses equal to 15 percent of the semiconductor division's operating profit, along with the removal of payout caps.

The two sides have reportedly reached some agreement on eliminating bonus caps set at 50 percent of annual salary, according to an industry source.

However, they remain at odds over how performance bonuses should be distributed to other loss-making business units and whether the agreement will be formally institutionalized.

The union has reportedly proposed allocating 70 percent of the semiconductor bonus pool to be shared across the entire division, with the remaining 30 percent distributed based on business unit performance.

Management, however, reportedly argues the system would reward loss-making units and undermine performance-based incentives. It is instead pushing for a lower overall allocation rate to such payouts.

Samsung Electronics' chip division posted a record operating profit of 53.7 trillion won ($35.8 billion) in the first quarter of this year. However, while the memory business is estimated to have been highly profitable, non-memory units likely posted losses.

Industry observers say a walkout could cost the Korean economy up to 100 trillion won, given the country's heavy reliance on semiconductor exports.

Government officials have raised concern over the strike, suggesting Seoul may invoke emergency arbitration powers to prevent the strike.

Under Korean law, the labor minister can issue an emergency arbitration order if a dispute is deemed likely to harm the national economy or seriously disrupt the lives of ordinary people.

Such an order would suspend industrial action for 30 days while the National Labor Relations Commission conducts mediation and arbitration.

Vice Labor Minister Kwon Chang-jun said the government's focus at the moment is to resolve the issue through dialogue.

"We are currently focusing on resolving the issue through dialogue without emergency arbitration," Kwon said during a parliamentary meeting.