Samsung Electronics Avoids Strike: How a Last-Minute Deal Was Struck

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As Samsung Electronics and its union reached a tentative wage agreement just before a planned general strike, Labor Minister Kim Young-hoon described the dispute as “growing pains” over how to redistribute the value created by technological innovation.

On the 21st, Kim appeared on the YouTube program Choi Wook’s Maebul Show and recounted the previous day’s negotiations. He said both sides made concessions and ultimately reached a dramatic settlement. The talks had failed to produce an agreement during pre-mediation at the Central Labor Commission and through two rounds of post-mediation, but negotiators struck a deal roughly an hour before the strike was set to begin.

Kim said this round differed from ordinary wage bargaining because it involved clashes of principle. He noted that typical wage talks center on percentage increases where a middle ground is possible. This time, however, it was a difficult negotiation marked by competing desires and conflicting principles.

The main sticking point was how to allocate a special management performance bonus for the semiconductor business. Under the tentative agreement, Samsung and the union agreed to allocate 40% of the Device Solutions (DS) unit’s special bonus pool across the entire semiconductor division first, with the remaining 60% distributed unevenly by business unit. They also agreed to delay applying differential payouts to loss-making units this year, implementing that rule beginning next year.

Kim said the company strongly held to the principle that rewards should follow performance, and management resisted paying bonuses to loss-making units, which made persuading the company difficult. He added that no principle is absolute. Because the system is new, he proposed postponing its implementation, and that concession helped break the impasse.

He also said the union stepped back from some of its original demands. Kim noted the union conceded on distribution ratios and asked that people understand the union leadership was weighing members’ positions until the end.

Kim pointed to structural issues in Samsung’s labor relations as background to the conflict. He said Samsung had long operated without unions and therefore lacked experience managing labor relations, while the union itself is a newly formed organization without an umbrella federation. He added that society also lacks established standards for dividing the company’s enormous excess profits.

Kim expressed concern about negative public sentiment toward the Samsung union. He warned against reflexively blaming engineers and cautioned that talent outflows are a real risk. He also addressed shareholders, arguing that when workers help grow the company, shareholder value ultimately increases as well.

Drawing a line on political calls blaming the so-called Yellow Envelope Act, Kim said the law’s core purpose is to enable indirectly employed workers to bargain with the primary contractor. He criticized the argument that the law explains the Samsung union’s rise while simultaneously branding the union as an “elite union” as self-contradictory.

Samsung’s union will hold a ratification vote on the tentative agreement from 2:00 PM on the 22nd through 10:00 AM on the 27th. The outcome of that vote will determine whether the deal becomes final.

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