Samsung deal averts strike but raises wider labour concerns

Samsung Electronics workers in South Korea approved a pay and bonus agreement on Wednesday that avoided a planned 18-day strike threatening global chip supplies while setting a precedent likely to intensify labour demands across the country’s largest companies.

The government-mediated deal was backed by 74 per cent of more than 62,000 union members after five months of negotiations tied to soaring profits in Samsung’s semiconductor division. Reuters reported that Samsung agreed to allocate 10.5 per cent of semiconductor operating profit to special bonuses for chip workers, with some employees set to receive total payouts of about $416,000 this year.

The agreement covers around 78,000 employees, slightly more than 60 per cent of Samsung’s workforce, according to Deutsche Welle. It includes an average wage increase of 6.2 per cent and introduces a new 10-year performance bonus system for semiconductor staff as demand for artificial intelligence chips boosts earnings across the industry.

Reuters reported that the deal marks only the second time a major South Korean company has formally linked bonuses to a fixed share of operating profit, following similar moves by rival chipmaker SK Hynix. Kim Keechang, a law professor at Korea University, told Reuters that “it might be only the beginning” of broader demands from organised labour at other large companies.

South Korean President Lee Jae Myung expressed concern about the structure of the arrangement before the deal was finalised. “Even investors receive dividends from net income after taxes are paid, don’t they?” Lee told a cabinet meeting last week, according to Reuters.

Business groups and shareholders have criticised the agreement’s implications for corporate governance and profitability. The Korea Enterprises Federation said in a statement that the deal reflected Samsung’s “special circumstances” and warned against “excessive bonus demands across industry”.

Reuters reported that tensions have already emerged within Samsung because the agreement disproportionately benefits workers in the profitable memory chip division. A smaller union representing consumer electronics staff has sought a court injunction to block the deal after withdrawing from negotiations earlier this year.

Samsung’s first-quarter operating profit rose roughly 750 per cent year-on-year, while the company’s market capitalisation surpassed $1 trillion this month, according to Deutsche Welle. Reuters separately reported that Samsung plans to invest 39 trillion dong, equivalent to $1.5 billion, in a semiconductor testing plant in Vietnam focused on legacy memory chips, with operations expected to begin in 2027.