As memory prices surge, employees at Samsung's Memory division have made progress with their negotiations with management. Troubles at Samsung were thrust into the limelight in April when employees took to the streets to demand 15% of the firm's operating profit as a bonus. The union members threatened a general strike lasting for 18 days and starting on May 21st if their demands were left unmet. Now, it appears that management has acquiesced to some of their demands and agreed to a 10% bonus.
Samsung's Management & Workers Make Headway In Negotiations For Bonus
According to members of the union and as reported by the Herald, Samsung's management has agreed to codify workers' bonuses for three years and then institutionalize them. Earlier discussions between the two parties had seen management nearly agree to allocating 13% of the operating profits as a bonus, but resisted when it came to codifying it. The workers had argued that, despite being larger than SK hynix, Samsung only paid a bonus that was 30% of hynix's bonus. As a result, they had demanded a bonus equal to 15% of the semiconductor business's operating profit, annual wage hikes and the removal of a bonus cap.
Management, on the other hand, had countered with a 10% bonus and a 6.2% pay increase. As per the Herald, Samsung's management has now offered to codify the bonus as well as the workers head towards their general strike slated to start on the 21st of this month.
Samsung Workers Continue To Demand Higher Bonus Payments Ahead of Strike
However, the union members are also calling the management's proposal as divisive tactics and urging members to stick with their plans of a general strike. 10% of Samsung's operating profits would equal 35 trillion in Korean Won paid out as bonuses, which is significantly higher than the 20 trillion paid by SK hynix to its workers.
Samsung's management has agreed to codify the bonus for three years and then institutionalize it, says the report. Employees also continue to demand a higher percentage of bonus compared to SK hynix as they argue that Samsung is leading its rival in the industry. They are also demanding institutionalization in order to ensure that every business unit gets the same payout and the memory business does not have to renegotiate in the future.
On the 7th, several brokerages cut their share price targets for Samsung due to worries about the hit to operating profit if the bonus is paid. The union continues to demand a 15% bonus, and estimates quoted by the Financial Times suggest that a full duration strike could cost Samsung anywhere between $6.9 billion and $11.7 billion in direct costs.
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
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