Samsung Electronics set a new record with 57 trillion won in operating profit for the first quarter, but there are views that this could instead prolong the conflict over performance bonuses with the union.

According to labor and management at Samsung Electronics on the 8th, wage talks between the two sides, which have faced off over issues including abolishing the cap on performance bonuses, have not proceeded since the union declared a halt to intensive negotiations on the 27th of last month.

The largest union, the cross-company Samsung Electronics chapter, on this day submitted an application to the competent Regional Labor Relations Commission, stating that “the company side is neglecting its duty to bargain in good faith,” and demanded, among other things, the replacement of the company negotiating representatives. The company says it will resume talks in line with subsequent procedures, such as the commission mediation outcome.

It is known that a decision by the commission typically takes two to three weeks. The union plans to hold a rally at the Pyeongtaek Campus on the 23rd and, if no agreement is reached thereafter, to carry out a general strike (May 21~June 7).

Since Samsung Electronics posted its highest-ever preliminary results, the union stance has hardened further. The cross-company union, with more than 70,000 members, urged in a statement released immediately after the results announcement the previous day to “make a decision to abolish the cap on performance bonuses commensurate with the results and to institutionalize it.” The union especially criticized that the company compensation plan is based on operating profit for this year of 200 trillion won for the Device Solutions (DS) division in charge of semiconductors. It is demanding that the cap on performance bonuses be permanently abolished and that a compensation plan be presented reflecting the upwardly revised performance outlook.

However, the company has been reluctant to abolish the cap on performance bonuses, citing reasons such as the possibility that the gap between DS and other business units could widen. During the second round of intensive talks last month, the company proposed that if it achieves the top position in the industry, employees in the Memory Business Unit would receive performance bonuses at a level equivalent to competitors, and that more than 10% of operating profit would be used as the bonus pool. The company explained that in such a case the current cap on the excess profit incentive (OPI), which is 50% of annual salary, would be exceeded. The union, however, rejected the proposal, demanding a change to the bonus system to permanently abolish the OPI cap.

Inside and outside Samsung Electronics, there are also concerns that the record results could act as a boomerang that drives labor-management negotiations to the brink. This is why there is talk that smoothly resolving the labor-management talks to prevent a general strike from becoming a reality has emerged as the top task. Multiple industry officials said, “In the event of a strike, not only would semiconductor production be disrupted, but the company as a whole could suffer considerable damage on a global scale.”