Samsung Electronics Union Suspends Strike After Tentative Wage Deal

Samsung Electronics shares rose more than 6% on Thursday after the company's labor union suspended a planned 18-day strike following a tentative wage agreement. The union had prepared to begin the strike after government-mediated talks collapsed on Wednesday. A further round of negotiations led by South Korea's minister for labor and employment Kim Young-hoon produced the provisional deal.

Samsung's labor union stated that the general strike was suspended and that all union members will vote on the tentative wage agreement from May 22 to 27. The union had sought performance bonuses equivalent to 15% of operating profit, removal of bonus payout caps, and a formalized bonus structure.

Kim Young-hoon said during a government briefing that the agreement remains provisional and that a long way remains before a final accord. He noted the gap between the two sides had narrowed considerably and that the union made significant concessions.

According to South Korean media reports, the chip division will receive 40% of the total bonus pool while other business units receive 60%. 5% of operating profits to its chip division and will link bonuses to operating profits while abolishing the previous cap.

The company will partially fund the special bonuses with company stock over at least 10 years, contingent on the chip division exceeding operating profit targets of 200 trillion won for 2026 to 2028. The target lowers to 100 trillion won from 2029 to 2035.

A contentious decision on dividing bonuses among Samsung's loss-making divisions was deferred for a year.

8% of South Korea's exports and 26% of its total market capitalization. 5% of the country's GDP. South Korean Prime Minister Kim Min-seok estimated that direct losses from the 18-day strike could reach 1 trillion won, with potential losses rising to 100 trillion won if chip production disruptions force the scrapping of semiconductor wafers.

South Korean President Lee Jae Myung said in a cabinet meeting that while labor unions may work to secure their interests, there must also be an appropriate limit. Rival SK Hynix agreed last September to a wage deal that sets aside 10% of operating profit as bonuses for its workers.