Employees of Samsung's insurance arm launch labor union

An employee walks out of a Samsung building in southern Seoul in this file photo. Yonhap

By Lee Min-hyung

Employees of Samsung Fire & Marine Insurance launched a union Monday for the first time in 68 years since its establishment despite the conglomerate's group-wide non-union policy.

This is the second time that a Samsung union has been established under the Federation of Korean Trade Unions. In November 2019, a group of workers from Samsung Electronics also set up the historic first union, challenging Samsung's decades-long policy

“We are going to put an end to the one-sided management that does not respect labor rights as provided in the Constitution,” said Oh Sang-hoon, the leader of the union.

He called on more employees to join to stop the company from further abusing its authority.

“We hope more than half of employees will join the union no later than the end of this year,” he said.

Market experts said it remains to be seen over whether the launch will have any impact on the firm's corporate earnings.

“The newly-launched union is different from so-called militant unions,” an analyst based in Seoul said on condition of anonymity.

“Some militant unions have a very negative image for corporate valuation and earnings,” said the analyst. “But most unions in the financial industry are not that hardline in their activities.”

Unions in the “hardware” and automobile industries are often dubbed “hardcore” when going on a strike. But things are not the case in non-manufacturing industries, according to the analyst.

But the establishment of the union does not bode well for corporate earnings at a time when the non-life insurance sector is suffering from sluggish growth due to external uncertainties.

“Aside from the union issue, major property insurers ― including Samsung Fire & Marine Insurance ― are unlikely to report a major turnaround in their earnings in 2020, as they will continue to face unfavorable market conditions this year,” the analyst said.

Most non-life insurers here reported significant drops in their earnings in 2019, compared to a year ago, in the face of toughening market rivalry and increasing loss ratios in their businesses, such as car insurance.

“Things will not take a turn for the better in 2020 despite their recent drive to increase car insurance premiums,” the expert pointed out.

The industry's top-tier players have recently announced plans to push for auto premium hikes of around 3 percent to 3.5 percent this year amid their deteriorating profitability.

The analyst added the figure does not appear big enough to offset their declining profit, so they need to find new revenue streams for sustainable growth.

The negative outlook for growth has in recent months driven down the firm's corporate valuation on the Seoul bourse.

The stock price of the Samsung subsidiary was traded as high as 255,500 won ($213) on the benchmark KOSPI on Dec. 13. But it nosedived to around 210,000 won as of the end of January, as chances are getting slimmer for a short-term earnings rebound.