Analysis of macroeconomic shock of ’18-day general strike’
In case of a full-scale suspension of production lines and prolonged recovery
The possibility of a significant drop in economic growth this year
The possibility of invoking the emergency adjustment right of Li
사진 확대 Samsung Electronics’ labor and management are holding final negotiations over a conflict over incentives through government mediation at the Central Labor Committee of the Sejong Government Complex on the 18th, three days before the general strike is announced. Yeo Myung-koo (left), head of the people team at DS (semiconductor division), a representative negotiation committee of Samsung Electronics, and Seungho Choi chairman of Samsung Electronics of Samsung Group’s ultra-company labor union (right), who will enter the post-adjustment conference room, respectively. Minister of Employment and Labor Kim Young-hoon (center) enters his office. Yonhap News Agency
A Bank of Korea report recently delivered to Cheong Wa Dae that predicted that if the 18-day general strike announced by Samsung Electronics’ labor union materializes, the economic growth rate will fall by 0.5 percentage points this year in the worst case scenario. Considering that it takes an additional three weeks to restore the production line after the end of the strike, the report estimated that the size of semiconductor production disruptions will also reach about 30 trillion won.
Based on the Bank of Korea report, Cheong Wa Dae analyzed the ripple effects of the Samsung Electronics strike on the national economy and came up with countermeasures. President Lee Jae Myung hinted at the possibility of exercising emergency coordination rights in the event of a labor-management agreement with Samsung Electronics, saying, “The basic rights of the people (such as the right to collective bargaining and collective action) can be restricted for public welfare to the extent that they do not infringe on the essential contents.”
According to Cheong Wa Dae and economic authorities on the 18th, the Bank of Korea recently delivered an emergency report to Cheong Wa Dae and related authorities that predicted the ripple effect of the general strike on the national economy. The move comes after the government asked the Bank of Korea earlier this month to analyze the impact of macroeconomic indicators for each scenario assuming a strike by Samsung Electronics.
Earlier, Cheong Wa Dae wrote its own report analyzing the impact of the Samsung Electronics strike on the front and rear industries at the end of last month, which goes one step further and includes the impact on macroeconomic indicators such as economic growth rate, current account and trade balance.
In this analysis, the Bank of Korea reportedly analyzed variables such as △ outage rate by production line △ front and rear industry-related link blocking rate △ global semiconductor unit price fluctuations and export price shock.
“Due to the nature of the semiconductor process, it is highly likely that the entire production line will be stopped even if only one or two production lines are shut down,” an economic official said. “The union has no choice but to set a basic scenario pessimistically as it is expected to take a strategy to cut off the key link in the production stage by strike.”
The BOK report, which Cheong Wa Dae received, predicted economic shocks for various scenarios on the premise that Samsung Electronics’ labor-management negotiations would collapse and go on a general strike for 18 days from the 21st to the 7th of next month. Among them, if the operation of the memory semiconductor production line is completely suspended and the worst-case scenario takes about three weeks to recover after the strike, the size of semiconductor production disruptions is estimated to be about 30 trillion won.
In addition, as domestic and foreign institutions forecast Korea’s economic growth rate of around 2.5 percent this year, as the Bank of Korea warned, if the economic growth rate falls by 0.5 percentage points due to the strike of Samsung Electronics, the value-added of GDP worth about 15 trillion won will evaporate.
President Lee said in a post on X that “the basic rights of the people are guaranteed under the constitution, but they can be restricted for public welfare to the extent that they do not infringe on the essence,” suggesting the possibility of exercising emergency coordination rights seems to have such a shock wave in mind. President Lee also said, “Workers should be able to receive a fair price of labor for the provision of labor,” but added, “Shares who invest at risk and loss share their share of corporate profits.”
It is interpreted as pointing out that Samsung Electronics’ all-time profits are not solely for employees. At the end of last month, the Blue House’s policy office prepared a report with the gist of “Samsung Electronics’ achievements are the fruits of society as a whole” and reported it to the president.
Politicians also called for a labor-management agreement. Park Sung-hoon, head of the public affairs department of the People’s Power Central Election Commission, said in a commentary that “Samsung Electronics’ labor and management will actually hold the final negotiations three days before the general strike is announced. It is a critical watershed that will determine the direction of the semiconductor ecosystem and the economy of people’s livelihoods in Korea, he said. “We urge a dramatic compromise for co-prosperity, not catastrophe.”