Samsung Electronics Faces Major Labor Conflict: Will a 15% Bonus Demand Lead to a Strike?

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Samsung Electronics is embroiled in a labor dispute over performance bonuses and a threatened strike. The union is demanding performance pay equal to 15% of operating profit for the semiconductor division and has threatened a company-wide strike. Management has responded with legal measures, citing the risk of illegal labor actions. Labor authorities and the union also disagree over whether the union has obtained majority-union status.

The Samsung Electronics branch of the Samsung Group’s cross-company union held a press conference on the 17th in front of Samsung Electronics’ Seocho Tower in Seoul, declaring it had secured majority-union status and worker-representative rights. The union said it will hold a rally at the Pyeongtaek plant on the 23rd and then launch a general strike from May 21 through June 7. The union estimates a strike could cost the company between 20 trillion KRW (approximately 15 billion USD) and 30 trillion KRW (approximately 22.5 billion USD), taking into account backup measures for equipment.

Labor authorities, however, said the union’s claim about majority status is inaccurate. The Gyeonggi Regional Employment and Labor Office said that Samsung management and the union submitted a joint inquiry in February about how to count members and determine majority status, and officials are still reviewing that submission; they have not confirmed majority status for either side.

The central dispute concerns the size of the bonus demand. Relying on Samsung Electronics’ first-quarter results, the union is asking for performance pay equal to 15% of operating profit for the semiconductor division—an amount that would reach into the tens of trillions of KRW (tens of billions of USD). Market participants warn the demand could affect research-and-development spending, mergers and acquisitions, and capacity for shareholder returns. Critics note the sum could even exceed last year’s dividend payments and R&D expenditures.

The proposal also raises questions of fairness across business units. If performance pay is concentrated in the relatively strong Device Solutions unit, it could widen gaps with the Device Experience unit, which handles home appliances, TVs and smartphones. After negotiations stalled, management warned in an internal notice that applying the union’s demands could disadvantage employees in the System LSI and Foundry divisions, which are expected to run deficits.

The conflict has spilled over into workplace-management issues. Samsung filed for a provisional injunction in court to bar illegal strike actions, citing risks such as workplace occupation. The union said it will not carry out illegal actions. Separately, evidence emerged that some union members checked whether colleagues had joined the union, and Samsung has requested an investigation into the collection of employee personal data and its provision to third parties.