Key Points:
- Samsung workers in South Korea began a three-day strike demanding better pay and more annual leave.
- The National Samsung Electronics Union represents 24% of Samsung’s South Korean workforce.
- Analysts predict minimal impact on production due to low participation rates and automation.
- The union has grown since Samsung stopped discouraging organized labor in 2020.
Samsung Electronics (005930.KS) is facing a three-day strike by its South Korean workforce, starting Monday, as employees demand better pay and additional annual leave. The National Samsung Electronics Union (NSEU), representing about 24% of the company’s South Korean employees, has warned of further action if their demands are unmet.
The NSEU, which has approximately 30,000 members, is pushing for an extra day of annual leave specifically for unionized workers. Despite the union’s actions, analysts believe that low participation rates and the company’s automated production processes mean the strike is unlikely to impact output at the world’s largest memory chipmaker significantly.
Last month, the union staged its first industrial action by coordinating annual leave to create a mass walkout. Samsung reported that this did not affect its business activities. The company has declined to comment on the current strike.
This week’s strike involves 6,540 workers, primarily from manufacturing sites and product development sectors. Workers gathered near Samsung’s headquarters in Hwaseong, south of Seoul, to voice their demands. Union president Son Woo-mok addressed media reports suggesting low participation rates, arguing that the union’s relative youth—founded only five years ago—has limited its ability to educate rank-and-file members about union activities.
“Education about labor unions for union members and employees has not been enough. But I don’t think this participation is low because our union is still young compared to other unions,” Son said. Senior union leader Lee Hyun-kuk hinted at the possibility of another round of strikes if the current demands are not addressed.
Union officials have criticized Samsung’s bonus system, describing it as unfair. They argue that the system, which calculates bonuses by deducting the cost of capital from operating profit, disadvantages workers.
The union has seen growth since Samsung pledged in 2020 to cease discouraging the formation of organized labor. This increase in union membership indicates a decline in staff loyalty. It presents another challenge for Samsung as it navigates fierce competition in the semiconductor market, particularly for chips in artificial intelligence (AI) applications.
On Friday, Samsung reported a more than 15-fold rise in second-quarter operating profit, driven by a rebound in semiconductor prices fueled by the AI boom. Despite this, Samsung’s share price performance has lagged behind its rival, SK Hynix (000660.KS). As of midday Monday, Samsung’s share price was up 0.5%, having earlier risen by as much as 1.72% to its highest level since January 2021. Last week, the share price surged 6.9% because of better-than-expected preliminary second-quarter earnings.
