Samsung Electronics wage talks collapse, raising strike threat

Wage negotiations between management at Samsung Electronics and its labor union have collapsed after the two sides failed to reach an agreement in mediation with the National Labor Relations Commission, raising the possibility of a walkout for the first time in two years.

The commission, a quasi-judicial body tasked with mediating labor-management disputes, decided to suspend the process on Wednesday, following the second round of talks a day earlier. Samsung Electronics management and labor representatives had conducted eight rounds of formal collective bargaining since December last year over a wage and labor agreement, but had not narrowed their differences. Negotiations effectively broke down Wednesday.

In an internal notice issued Wednesday, Samsung Electronics said it had made every effort possible to improve employee compensation, outlining proposals discussed during negotiations.

According to the company, the union offered to lower its demand for a base pay increase to 5 percent and expressed willingness to discuss differentiated application of the Over-Performance Incentive by business division, provided the bonus calculation criteria were made more transparent and the existing cap on payouts was abolished. The OPI is a performance-based bonus awarded to employees who exceed predefined targets.

In response to calls for greater transparency, management proposed allowing employees to choose the OPI funding source — either 20 percent of economic value added or 10 percent of operating profit.

The company also presented a package of additional measures, including a 6.2 percent wage increase, the distribution of 20 shares of treasury stock, higher salary ceilings by job grade, housing loan support of up to 500 million won ($341,000) and expanded long-service leave benefits.

Despite these concessions, the union maintained its demand for the complete removal of the OPI cap. Management rejected the proposal, arguing that abolishing the cap could lead to feelings of relative deprivation among business divisions with limited ability to exceed performance targets.

With mediation formally suspended, the union has converted its joint bargaining body into a joint struggle headquarters and begun procedures to secure the right to strike. If a majority of union members approve the move in an upcoming strike authorization vote, the union may proceed with a walkout.