Samsung to Sign 1st Agreement with Labor Union
Samsung Electronics (005930.KS) has agreed to sign a contract with the labor unions that were formed by employees after many months of negotiations and potential strike threats. The unions, formed in 2018, represent ~5,000 of Samsung’s ~110,000 employees and have been pushing to get Samsung to change compensation provisions and negotiate wage increases that reduce the pay gap between line employees and management. The new package, which is expected to be signed in a few days after 10 months of negotiations, puts in a 7.5% wage increase for 2021 and a 9% increase for this year, the highest in 10 years and the first time in the company’s history that they have signed an agreement with a labor union.
As p[art of thye agreement a task force is to be set up to rework a number of Samsung wage policies, one in particular that progressively lowered employee salaries in the years leading up to retirement in order to ‘encourage’ senior employees to push out retirement as far as possible. The union was also seeking to change the rules regarding pay incentives for those employees who work during holidays and pushed the company to agree to pay employees for unused holiday time, and not to include overtime pay as part of an overall wage package, which essentially meant there was no overtime pay.
Over the years Samsung has paid employees ‘incentives’, which were based on calculations by management that were not disclosed to employees, while other South Korean companies tend to use a fixed percentage of net profit as the incentive pool. Samsung has promised to provide more transparency into how the calculations were made and the union relinquished on their original request for a 25% share of the profits. This was a long battle (31 bargaining sessions) to at least begin the unionization of Samsung and one that was not without the use of ‘leverage’ on both sides, but it seems that a final agreement has been made and at least those in the union have the ability to collectively bargain with management, something they have never been able to do previously.
As p[art of thye agreement a task force is to be set up to rework a number of Samsung wage policies, one in particular that progressively lowered employee salaries in the years leading up to retirement in order to ‘encourage’ senior employees to push out retirement as far as possible. The union was also seeking to change the rules regarding pay incentives for those employees who work during holidays and pushed the company to agree to pay employees for unused holiday time, and not to include overtime pay as part of an overall wage package, which essentially meant there was no overtime pay.
Over the years Samsung has paid employees ‘incentives’, which were based on calculations by management that were not disclosed to employees, while other South Korean companies tend to use a fixed percentage of net profit as the incentive pool. Samsung has promised to provide more transparency into how the calculations were made and the union relinquished on their original request for a 25% share of the profits. This was a long battle (31 bargaining sessions) to at least begin the unionization of Samsung and one that was not without the use of ‘leverage’ on both sides, but it seems that a final agreement has been made and at least those in the union have the ability to collectively bargain with management, something they have never been able to do previously.
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