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Samsung Union Warns of Historic Walkout as Slump Persists

(Bloomberg) -- Samsung Electronics Co. faces its first-ever labor strike after an influential union threatened to stage a walkout to protest wages and the company’s alleged attempts to block labor organization.

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The union, which says it represents about 9% of Samsung staff or about 10,000 employees, issued a statement Thursday accusing Korea’s largest company of shutting its leaders out of salary negotiations. The union had previously asked for wage increases of more than 6% this year, in part to offset domestic inflation running at more than 4%.

Samsung management announced last month a 4.1% hike for its highest performers and 2% for average workers for 2023, according to the union. The company followed all related procedures and will continue to communicate with the union, Samsung said in an emailed response to questions from Bloomberg News.

It’s unclear whether the organization will follow through. But the worker unrest comes at a bad time for Samsung, which is struggling to cope with waning global demand for everything from memory chips to smartphones and appliances. Samsung, a proxy for the global tech economy, posted a record $3.4 billion loss in its chip division alone for the March quarter. The union is also demanding that Samsung Chairman Jay Y. Lee join the discussions.

“We will decide whether to go on strike after discussing with our 10,000 members,” Lee Hyun Kuk, a representative of the National Samsung Electronics Union, said during a press conference in front of Samsung’s building in Gangnam, Seoul. “It depends on the attitude of Chairman Jay Y. Lee. We sincerely ask him to come to the table for talks.”

If Samsung goes on a strike, the other 11 unions at Samsung Group affiliates such as builder Samsung C&T Corp or electric car battery maker Samsung SDI Co. will follow suit, said Oh Sang-Hoon, a union representative for Samsung Fire & Marine Insurance Co.

“We are not here just for a salary hike, but to protest against Samsung’s crackdowns on the union,” Oh said. “The chairman apologized for a union-free management in 2020, but he still hasn’t met with us.”

Read more: Samsung Looks Past $3.4 Billion Chip Loss to Late 2023 Recovery

Asia’s largest electronics company said last week it expected demand to only gradually improve in a range of markets from smartphones to PCs and storage, driven by a Chinese economic recovery and accelerating AI development. That could begin happening only from the second half of this year.

South Korean unions are an influential voice in local politics and company strikes are not uncommon, but the walkout would be the first to hit Samsung since its 1969 founding. Samsung’s unions secured the right to strike last year after wage talks failed, but didn’t follow through.

Thursday’s action began after talks between Samsung and union leaders fell through this week. A government agency helping arbitrate the negotiations halted discussions after failing to resolve that deadlock, the Korea Herald reported Wednesday.

The union negotiation body this time initially wanted a 10% wage hike before proposing various options including a premium over rivals or a lump-sum payment, according to the newspaper. Samsung last month agreed to an average increase this year of about 4%, but the union argues that deal was inadequate and bypassed the labor organization.

(Updates with Samsung’s comment in the third paragraph)

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