Samsung avoids strike as shares surge on union agreement

Samsung Electronics’ shares surged on Thursday after the company reached an 11th-hour agreement with its South Korean union, averting a planned strike, although the terms—including bonuses of around $416,000 for some workers—sparked some concern, News.Az reports, citing Reuters.

A planned 18-day strike involving about 48,000 union members has now been suspended. The agreement, which was mediated by the government, will be put to a vote between May 22 and May 27. The union leader has said he expects it to be ratified.

The deal brought relief across South Korea. Samsung accounts for roughly a quarter of the country’s exports, and the planned strike had been expected to cause significant damage to the economy and disrupt global chip supply if it had gone ahead.

Samsung’s shares and the benchmark KOSPI index both surged nearly 8% higher in morning trading.

Ryu Young-ho, a senior analyst at NH Investment & Securities, said that while investors were relieved the strike had been avoided, the agreement was not entirely positive, as it resulted in significantly higher labour costs.

On the positive side for Samsung, he added that the decision to pay performance bonuses in stock rather than cash could reduce the company’s immediate financial burden.

A union demand to allocate 15% of operating profit toward bonuses was also reduced.

Under the agreement, Samsung is expected to set aside about 10.5% of operating profit for special bonuses for the chip division, which covers its memory and logic chip businesses, according to the union.

A document showed that these bonuses would be paid in company stock for at least 10 years and would be conditional on the chip division achieving more than 200 trillion won ($135 billion) in annual operating profit from 2026 to 2028, and 100 trillion won from 2029 to 2035.

For example, a memory chip worker with a base salary of 80 million won is expected to receive a bonus of around 626 million won, or $416,000 this year, mostly paid in stock, a union source said, speaking on condition of anonymity.

Samsung Electronics’ chip division chief Jun Young-hyun urged staff in a letter seen by Reuters to “leave behind this time of conflict” and unite to strengthen the company’s global competitiveness and long-term growth.

News.Az 

By Nijat Babayev