The labor union at Samsung Biologics (207940.KS) has abruptly accepted a company proposal for post-mediation talks, a move seen as a step back to break a deadlock after mounting public criticism of its bonus demands and open pressure from the government.
The union said on the 14th that “at the 24th round of collective bargaining on the 11th of this month, the company actively raised the idea of post-mediation, and the union reviewed it positively and decided to accept.” The union added that documents signed by both sides would be submitted to the Incheon Regional Labor Relations Commission that day. Post-mediation is a system under which, if labor and management agree after mediation has formally ended, mediation is conducted again under the labor board’s coordination. Selecting the mediation members is expected to take about one to two weeks, and reaching a final conclusion one to two months.
Samsung Biologics and its union have remained at odds since wage and collective bargaining negotiations began late last year. The company offered a 6.2% increase in base pay and a one-time payment of 6 million won, while the union called for a 14.3% base pay increase, a 30 million won incentive payment per person and an allocation of the company’s own shares over three years. For performance-based bonuses, the union demanded 20% of operating profit, later revised to 15%. The union also insisted that personnel matters such as hiring and promotion, as well as management issues including spin-offs, mergers and transfers, be agreed upon with the union in advance.
The mood began to shift, however, as the view spread that these demands were excessive. Even Samsung Electronics’ Device Solutions division, a beneficiary of the semiconductor boom, set its special performance bonus pool at 10.5% of operating profit, and the president himself took direct aim at the union. President Lee Jae-myung criticized the union, saying that a claim by the union to share part of operating profit “could discourage foreign companies from investing in Korea and seriously affect national industrial policy,” and that “if handled poorly, it could crush a young shoot just as the industry is getting on its feet.”
The government eventually stepped up its pressure across the board, even raising the possibility of legislation to check the union’s demands. Trade, Industry and Energy Minister Kim Jung-kwan said on the 6th that discussions were under way to revise the Capital Markets Act and the Commercial Act to require shareholder approval when a union demands “performance bonuses linked to operating profit.” Kim said, “For a company to make a decision against the interests of shareholders and investors without at least going through a board of directors or a shareholders’ meeting is an overreach of authority,” adding, “If our society ignores shareholders and investors and acts against their interests, who would invest or want to become a shareholder?”
Separately from the post-mediation process, however, the two sides agreed to continue voluntary negotiations. The union carried out a partial strike in April and a full strike in early May, followed by a work-to-rule campaign refusing overtime and holiday work. The company’s accumulated losses from production disruptions and other factors are estimated at about 150 billion won.