Samsung Electronics fails to reach pay deal with union, raising strike risk

SEOUL: Samsung Electronics and its labour union failed to reach a wage agreement on Wednesday, increasing the risk of a large-scale strike that could disrupt semiconductor production and weigh on South Korea’s economy.

The deadlock followed two days of government-mediated talks earlier this week, according to officials and company statements.

Amid growing concern, South Korean Prime Minister Kim Min-seok called an emergency meeting of relevant ministers, instructing authorities to closely manage the situation given its potential economic impact.

He urged continued dialogue between management and the union to prevent a strike “under any circumstances,” his office said.

18-day strike threat over bonus gap with SK Hynix

The union has warned of an 18-day strike starting May 21 if its demands are not met, citing a significant gap in bonus pay compared with rival SK Hynix.

Samsung initially saw its shares fall as much as 6 per cent, but they later recovered to trade higher following reports of government intervention. SK Hynix shares rose sharply on expectations it could benefit from the dispute.

Workers demand overhaul of bonus structure

Union representatives said Samsung had proposed a one-off performance payment for 2026 but rejected demands for a permanent overhaul of the bonus system.

The union is seeking removal of a cap on bonus pay currently set at 50 per cent of base salary, along with a fixed share of operating profits and greater transparency in bonus calculations.

It said more than 50,000 workers could join the strike, which could delay shipments and disrupt global chip supply chains.

Samsung said it regretted the breakdown of talks but remained committed to dialogue to avoid what it described as a worst-case scenario.

Government considers emergency arbitration option

The National Labor Relations Commission, which mediated the talks, said it ended discussions due to a wide gap between the two sides.

Labour Minister Kim Young-hoon said the dispute should be resolved through negotiation, although there is speculation the government could invoke emergency arbitration powers if economic risks escalate.

Such a move would temporarily suspend industrial action for up to 30 days while mediation continues, though it is rarely used and would represent a significant intervention by the government.

Rising tensions amid record profits

Frustration among Samsung employees has increased amid record corporate earnings driven by the global artificial intelligence boom.

Union membership has surged to more than 90,000 workers, representing over 70 per cent of Samsung’s South Korean workforce.

The dispute comes as Samsung recently became only the second Asian company after TSMC to reach a market valuation above $1 trillion.