Samsung Electronics (005930.KS) has avoided a major strike in its Device Solutions business after its labor union suspended a planned 18-day walkout following a new round of negotiations.
The planned strike would have been the largest in Samsung’s history. It was linked to worker dissatisfaction over the company’s record sales and concerns that employees were not receiving enough of the profits. Reuters reported that the tentative deal was reached after government-mediated talks.
Union members will vote from May 22 to May 27 on whether to accept the tentative agreement.
Under the proposal, Samsung would allocate a special bonus equal to 10.5% of operating profits to its chip division. The company would also accept the union’s demand to link bonuses to operating profits and remove the bonus cap.
The chip division would also receive 40% of the total bonus pool, in addition to the special bonus.
The union had sought bonuses equal to 15% of Samsung’s operating profits.
It had also demanded the removal of bonus payout caps and a formal bonus structure.
The tentative agreement does not fully meet the union’s original demand, but it gives chip division employees a stronger link between company profits and compensation.
South Korean Prime Minister Kim Min-seok previously estimated that the planned 18-day strike could have caused direct losses of KRW 1 trillion, or about $660 million.
Samsung plays a major role in South Korea’s economy. The company accounts for 22.8% of the country’s total exports and 26% of its market capitalization.
Because of that, a major labor disruption at Samsung would have had broader economic consequences beyond the company itself.
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