By Hyunjoo Jin
SEOUL, May 27 (Reuters) – Unionised workers at Samsung Electronics have approved a highly contentious deal on bonus pay – one that averts a massive strike but also exacerbates deep disparities in fortunes among employees at the tech conglomerate.
Two unions for the world’s largest memory chip maker said on Wednesday that 74% of the 62,616 workers who cast their votes had backed the agreement.
The government-mediated agreement, forged after a bitter five-month dispute, has sparked both wide relief and alarm across South Korea.
On the one hand, Samsung accounts for roughly a quarter of the country’s exports and if the deal had not been ratified, an 18-day strike by 48,000 workers would have been set in motion, damaging the economy and denting global chip supplies.
BUSINESS NORMS SCRAPPED TO PLACATE CHIP WORKERS
But at the same time, the deal marks only the second time that a major South Korean company has agreed in writing to reward some employees with a fixed percentage of operating profit – flying in the face of normal practice that calls for bonuses to be calculated after corporate taxes are paid.
In Samsung’s case, 10.5% of its semiconductor operating profit will go towards special bonuses for chip workers.
That’s sparked concern from South Korean President Lee Jae Myung, business groups and academics. Chief among their worries is that some unions that are making similar demands will harden their stances and more could follow suit.
A shareholder group, composed of individual shareholders, has also threatened to sue. Among their arguments, they say that such an arrangement is unlawful because it was not passed at a shareholders’ meeting.
The deal reduces the amount of money available to be distributed to shareholders and “potentially invites legal scrutiny under the Commercial Act regarding the fiduciary duty to shareholders,” said Seo Ji-yong, a professor of business administration at Sangmyung University.
A SUMMER OF DISCONTENT TO COME
Samsung management is expected to have its hands full dealing with the discontent that the deal has sowed.
“Finding ways to bridge internal labor divides will be Samsung’s biggest task,” said Korea University law professor Park Ji-soon.
Forged under much pressure to narrow the gap with sky-high bonuses at rival chipmaker SK Hynix, the deal mainly benefits workers in the company’s memory chip division, which has seen profits soar due to the colossal investments globally in AI. Some of those workers are set to receive bonuses of around $416,000 this year.
Workers in Samsung’s other chip units will receive less but still substantial bonuses, while employees in its consumer electronics divisions are set to receive very little by comparison.
“The atmosphere is pretty gloomy and many of us have lost motivation,” said one chip foundry worker at Samsung’s sprawling chip campus in Pyeongtaek, declining to be identified.
“It really is an ironic situation — being depressed despite receiving more money.”
It also remains to be seen if a court will grant a Samsung union representing consumer electronics workers their request to block the vote. They were excluded from the vote after their union left the negotiating team due to disagreements.
That could possibly lead to a new vote, though the deal appears to have far more backers than detractors.
Shares in Samsung ended 3% higher and have climbed 11% since the wage agreement was struck last week. That performance, however, still lags the stellar 29% gain over the same period for SK Hynix, which, benefiting from the investor frenzy over AI, joined Samsung and Micron on Wednesday in having a market value of over $1 trillion.
($1 = 1,501.7400 won)
(Reporting by Hyunjoo Jin and Heejin Kim; Editing by Ed Davies and Edwina Gibbs)
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