By Hyunjoo Jin
SEOUL, May 19 (Reuters) – Samsung Electronics and its South Korean labour union began another round of government-mediated talks on Tuesday to break an impasse in negotiations over pay and bonuses and avert the biggest strike in the tech conglomerate’s history.
The two sides are under mounting pressure to prevent an imminent strike by 45,000 workers that could hurt the Korean economy and global supply chains by disrupting chip production. South Korea’s prime minister threatened over the weekend to step in through emergency arbitration to resolve the crisis.
Samsung and the labour union remained far apart during talks on Monday, the chairman of the National Labor Relations Commission told reporters. But he said on Tuesday the two sides are narrowing some differences and there is still a possibility that they could reach an agreement.
Samsung and the labour union did not immediately respond to requests for comment.
The heavyweight conglomerate’s shares fell 2.5% on Tuesday, while the broader market slid 3.2%.
South Korean business groups urged the union on Monday to drop its strike plan and the government to “immediately” invoke emergency arbitration to suspend the strike.
The strike is scheduled to start on Thursday and last for 18 days at Samsung, which is the world’s largest memory chipmaker and accounts for nearly a quarter of Korea’s exports.
The strike threat comes amid an acute global shortage in memory chips, which are essential components in artificial intelligence data centers, smartphones and laptops. The shortage has fueled soaring profits at Samsung and its peers in recent months.
SAMSUNG’S WIDENING PAY GAP WITH HYNIX
The dispute is the biggest clash between Samsung and its labour union since Samsung Electronics Chairman Jay Y. Lee pledged to shed its reputation of union-busting activities in 2020, months after the creation of its first labour union.
Samsung is one of the most sought-after workplaces in Korea, but employees were increasingly frustrated with a widening pay gap with smaller rival SK Hynix which took an early lead in supplying high-bandwidth memory for artificial intelligence chip units to Nvidia.
SK Hynix introduced overhauls in pay structure last year, resulting in bonuses more than three times higher than those offered to Samsung workers, accelerating talent defections to SK Hynix and sparking a surge in Samsung union membership, union members said.
Exacerbating workers’ ire have been Samsung’s record profits as the AI boom drives up demand for chips.
The union has demanded Samsung abolish a bonus cap of 50% on annual salaries, allocate 15% of annual operating profit to a bonus pool shared by workers and formalise this in contracts.
Samsung has proposed that memory chip workers receive “special” bonuses that would top those of SK Hynix employees, while maintaining the bonus cap.
On Saturday, Lee apologised to customers and the public over the labour dispute in his first public comments on the issue. Samsung’s customers include Alphabet, Apple, Amazon and Nvidia.
A court on Monday partially granted Samsung’s request for an injunction, ruling that essential staffing levels at some production facilities must be maintained during any industrial action.
(Reporting by Hyunjoo Jin; Additional reporting by Joyce Lee; Editing by Muralikumar Anantharaman)
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