Tenets of the Samsung Electronics Workers Union at the consumer electronics unit demanded that a South Korean court suspends a vote on a pay, which had been formally submitted to the labor relations board. The government brokered agreement, which was mediated last week, was able to stave off an eighteen-day walkout by 40,800 employees. But the deal has sparked new internal conflict within the company, as the bonuses provided to employees in the memory chip business are exceptionally high—in addition to making the division extremely profitable due to the artificial intelligence craze.
If anyone had been paying attention to Samsung’s laboured relations the last year would know that there’s a lot of frustration bubbling under the surface. The chip workers are the golden children of the conglomerate, and as demand for AI spurs up the price of semiconductors, their counterparts in smartphones, televisions and home appliances feel left out. The whole thing is a typical story: two companies in one building, with bad blood.It’s a tale of two companies in one roof and animosity has turned to litigation. The Samsung Electronics Co Union (also known as the SECU) represents about thirteen thousand members of the company, many of whom are not directly employed in the chip industry. In its statement Tuesday, the union said it had taken action because it was told it was barred from participating in the upcoming vote.
The vote actually started last Friday and will run until Wednesday morning. Insiders believe that the deal is likely to sail through due to the larger negotiating group’s (Samsung Electronics Labor Union or SELU) twenty thousand report of over ninety percent of its fifty seven thousand two hundred eligible members having already voted. It’s unclear how those members cast their votes. But the SECU says that denying its members the vote infringes their fundamental rights as unionized workers. But the disagreement is so deep that SECU had already stepped back from the negotiation team when negotiations on the government mediation to reach an agreement were even concluded.
This issue is complicated by the fact that the pay contract is what it is. The deal guarantees the memory chip workers extensive payouts as Samsung’s most precious asset during the current artificial intelligence craze is its memory chip unit. Meanwhile, staff at consumer electronics companies, where profits are lower and growth more lukewarm, are likely to be willing to take smaller wage hikes. One union spokesperson was quoted as saying, “We don’t object to chip workers getting paid well – they deserve it – but we are not going to accept a process that excludes us completely. “Silencing,” said another, “was what the company and the team of mediators did when they seemed to think we were not present.”
Strategically, Samsung is in a tough situation. To compete with SK Hynix and TSMC in the AI race, the firm must be able to hold on to some of its best talent in the semiconductor business. But it is just as reliant on the health of its larger consumer electronics industry to continue manufacturing of their line of flagship smartphones, high-end televisions and home appliances that do still make money. If ratified, without SECU’s participation, this pay deal may contribute more to further divisions within the organization and potentially to future labour actions. Now the court must determine if the voting process was fairly conducted and if it violates collective bargaining rights under South Korean labour law to exclude a meaningful union.
Neither is there any easy victory here. Samsung’s renewed uncertainty if it is denied that vote, and potential delays, if it is granted, in implementing a wage settlement that already averted a strike. The SECU, if permitted by the court to vote, and if the deal passes, could escalate its legal battle or take independent action. There is also public opinion that is divided. For some pundits, that may be the fruits of their labors when memory prices were much lower in leaner years. Some say that it is unethical for one company to have two classes of employees and cannot be continued for long without affecting their morale and productivity.
An even larger unknown is whether Samsung will have to reconsider its divisional bonus strategy in the future. But now it’s all about the Seoul court and the final hours of the votes. The will to win is making one end of the business thrive while the other end suffers, at least not in a way that we may perhaps consider full resolution. The true story behind the headlines is that employees who assemble Samsung’s leading Galaxy phones and QLED televisions want to know: When the tide comes in, does it rise all boats or just the most lucrative ones?
