Samsung Electronics Labor Strife Averted by Court and President

As unionized workers and Samsung Electronics management attempted to hash out an agreement before Thursday's planned walkout, both a district court and President Lee Jae Myung moved to avert a strike, citing the need to avoid plunging the national economy into crisis.

Lee also signaled that the government may move to exercise emergency adjustment powers, saying on social media platform X (formerly Twitter) that "corporate management rights should also be respected as much as labor rights."

The Suwon District Court's partial acceptance of Samsung's injunction claim requires the union to ensure that its walkout does not disrupt production. Moreover, the court ruled that operations related to safety and prevention of product damage should continue at normal levels. The ruling also said the strike should not lead to a deterioration of materials used for production, and the union cannot take over company facilities or prevent workers from entering those facilities.

The court's ruling and the president's comments reflect concern over Samsung's role in the national economy and the disruption a strike would cause in the global chip supply. The day before, Prime Minister Kim Min-seok urged the union and management to reach a deal, saying that the strike would be "fatal" to the economy. Samsung, together with its chipmaking peer SK hynix, is a major supplier to tech clients such as Nvidia, Apple and others, amid the artificial intelligence boom. The estimated loss from the 18-day strike stands at around 100 trillion won ($69 billion).

The two Korean chipmakers' ability to produce a range of chips has played a substantial role in the recent surge in the Korean bourses, fueling first-quarter growth in the stock markets as well as the respective companies' first-quarter earnings.

Workers' rights here were hard-won through decades of sacrifice and battle during the heyday of industrialization in Korea. Their right to collective action is upheld in the Constitution. Management-labor relations have been marked by friction while evolving with the times. The hefty bonuses promised at SK hynix helped fuel discontent for Samsung's relatively young union that only launched in 2020. The conflict over profit-sharing at Samsung may shape how Korean companies and their employees approach reallocation of profits in the future.

For now, amid the semiconductor supercycle, Korea's tech giants are competing shoulder to shoulder globally. Korean workers and management should look at developments in Taiwan and Japan, where top firms are pouring money into investments. We are all workers on some level, and all parties must now find space to determine which priorities will benefit the individual, the company, the sector and the national interest.

One positive signal is that management and workers are willing to continue their marathon talks to try and come to an agreement. No one would be satisfied with the alternative. A strike at Samsung would disrupt the supply chain and erode the firm's credibility. Moreover, rival companies stand ready to fill in for any absence of semiconductors made by Samsung.

Domestically, the demand for better distribution of earnings has spilled over into other companies. Sentiment-wise, some workers in other sectors have voiced disapproval over the strident stance of the Samsung unions when presented with offers that appear reasonable and sufficient.

The union has demanded that Samsung abolish a cap of 50 percent on bonuses and allocate a fixed 15 percent of annual operating profit to bonuses, which should be written into the contract. Management, in turn, has put up a proposal to allot 9 to 10 percent of its annual operating profit to a bonus if that profit exceeds 200 trillion won, while maintaining the 50 percent cap on bonuses.