The biggest South Korea company, Samsung Electronics and its labor union, have called for a new round of talks just as it appeared that they were facing an unprecedented and prolonged work stoppage. Talks between the two sides will continue on Wednesday after a marathon fifteen-hour negotiation session, which ended just after midnight. They succeeded in closing a few gaps, but one important one remains unresolved—and that one is the deciding one that will either make it possible for tens of thousands of workers to walk off the job for eighteen days beginning Thursday or cause them to cease work.
The N.L.R.B., which has been working through the complicated negotiations, confirmed the meeting. The commission’s chair, Park Su-keun, spoke to reporters about where things stand. “There is one issue about which the management and union have not come to agreement,” he said, “the most important issue,” but did not explain the issue in detail. The generality of the language is unusual in a labour dispute of this magnitude, and it does indicate the sensitivity of the issue that remains. Samsung has had an explosive history of labor relations in the last few years and nowhere has it been more explosive than in the area of bonuses. This time, it’s much more serious than ever before.
The nature of the moment is different, because of the size of the proposed strike. Almost 48,000 workers are ready to strike for over two weeks. That’s right, a strike at Samsung’s semiconductor operation lasting just 18 days would not only make headlines but have a domino effect on the global economy. S. exports almost a quarter of South Korea’s total exports. It is also the world’s biggest memory chip producer. But at a time when there already is a shortage of high-bandwidth memory and cutting-edge chips when the artificial intelligence boom has made it hard to keep up, any large-scale production disruption could exacerbate those bottlenecks virtually overnight.
This is where I’m struck as how close the two sides got to an agreement, having followed labor disputes over the years in tech manufacturing. As long as it takes to negotiate, 15 hours, should not be interpreted as failure; it’s an indicator that a deal is not impossible. They weren’t even shaking hands when they walked away, which implies that the issue that remains is a very symbolic or financial structural one. In previous talks with Samsung some bonus payouts have been linked to complex profit-sharing formulas that rely on results from certain divisions. Sometimes those formulas discriminate against semiconductor workers compared with other workers, such as those in mobile units or displays, and this inevitably creates friction. Quite possibly this “most important issue” concerns a different rate of bonus for those who work at the chip division compared to those who work elsewhere in the company, or perhaps the union is demanding that the company pay its workers a guaranteed minimum bonus, and Samsung’s philosophy is to pay for performance.
Choi Seung-ho, the union leader, has said he won’t budge on where the talks take place. He will remain overnight to be directly involved in Wednesday’s talks. Such a personal investment is important. This indicates to the union members that their leaders have tried everything possible before resorting to a strike. That it indicates to Samsung that the partnership is properly thinking about resolving the issue, although not at any price.
In the meantime, the South Korean government is increasingly concerned about the situation. But on the weekend, the officials warned of an “arbitration”, which they could impose if the two parties did not agree. With that structure, a strike would last for a period of thirty days, during which time the government would be able to mediate. On the other, it has also been a comfort to investors, who view the threat as a buffer from the abyss of immediate chaos. In other words, it places tremendous stress on the union. If they think the government is on their side, then it may harden, not cool, them down. No one wants to be seen as wielding to the political barrel.
Another limitation that most outsiders don’t take into account is timing. The commission chair said any tentative agreement the unions reach on Wednesday must include time for union members to vote. That means talks must be completed by morning local time to allow the union a chance to hold a ratification vote ahead of the deadline on Thursday. That’s really a tight one. It helps both parties to make swift and decisive decisions rather than a lengthy process.
Strike action, if it is to occur, would have a significant human and economic impact. In addition to the export statistics and chip lines, there are almost half a million families that are directly impacted. The decision is not taken lightly by workers who have worked in Samsung’s cleanroom or fabrication plants for years. People with no experience in the semiconductor business are not aware of the work required to produce semiconductors, which is both physically and mentally challenging. Those who operate those fabs 24/7, in full-body suits and air filtered environments, should be compensated accordingly. Meanwhile, Samsung also has to deal with some memories where margins are wafer-thin, and management has fiduciary duties of its own. In this case, there is no clear right person or wrong person: only two parties fighting to guard their vested interests in a very fragile global tech economy.
Overall, South Koreans have mixed views. For older generations, strikes are damaging to the competitiveness of the country, particularly as the country has historically thrived on the chaebols, such as Samsung. Younger workers, however, increasingly view collective action as the only means of redressing on-going inequities in the distribution of profits. The outcome of these talks is meaningful beyond the factory floor, due to this cultural generational divide.
