Despite Direct Mediation by Labor Commission Chair, Deadlock Persists Over Bonus Criteria and Formalization [Samsung Electronics Strike at a Crossroads]

Samsung Electronics and its labor union returned to the bargaining table under the mediation of the National Labor Relations Commission ahead of a general strike, but they remain deadlocked over the key issue of performance bonus standards and formalization. The union is demanding that 15% of operating profit be institutionalized as the bonus pool, while management is sticking to the existing bonus system, leaving the final negotiations shrouded in uncertainty. The chairperson of the commission said the two sides were still at an impasse and made clear that the 19th is the final day of the post-arbitration process.
■ Negotiations remain uncertain
Samsung Electronics, its labor union, and the Central Labor Commission began a second round of post-arbitration talks on the 18th at the National Labor Relations Commission in Government Complex Sejong. It came five days after the first round collapsed on the 13th.
At the union's request, Chairperson Park Soo-geun stepped in personally to mediate, but it remains unclear whether the talks will reach a deal. The biggest sticking point is the method and scale of performance bonuses, and it is uncertain whether the gap between labor and management can be narrowed.
For that reason, the union, management, and the commission decided not to end the talks on the 18th and instead resume them on the 19th. On both days, they plan to continue last-minute negotiations until 7 p.m. Park told reporters at the commission that "the post-arbitration process will continue until tomorrow."
The second round of post-arbitration talks is therefore expected to conclude on the 19th rather than on the 18th. That leaves just two days before the general strike announced by the Samsung Electronics enterprise-level union. Although post-arbitration talks do not have a separate deadline, Park said, "The meetings will continue until tomorrow." The key question is whether the union will accept the mediation proposal. When asked whether the atmosphere suggested progress, Park replied, "We are still at a deadlock."
■ Disagreement over 'operating profit N%' and 'formalization'
Samsung Electronics and its labor union have still not found common ground on the size of the bonus pool or whether the system should be formalized.
The union is calling for a system that would institutionalize the use of 15% of operating profit as the bonus pool. It argues that the current excess profit performance bonus system, or Over-Performance Incentive (OPI), which is based on economic value added, gives management too much discretion. By setting a fixed percentage of operating profit as the bonus pool, the union says the system would become more transparent. Under the union's proposal, if Samsung Electronics' operating profit this year reaches the projected 30 trillion won, the bonus pool would amount to about 4.5 trillion won. That would mean an average of about 58 million won per person for semiconductor employees, or roughly 78,000 workers. At the first post-arbitration session, however, the union also suggested that the operating profit share allocated to bonuses could be lowered by 1 to 2 percentage points if part of the OPI were paid in stock through an expanded Over-Performance Incentive stock compensation system, which could still bring the total to 15%.
Management, meanwhile, has reportedly proposed either keeping the existing OPI framework, which caps payouts at 50% of annual salary, or paying 10% of operating profit, according to the union. It also proposed creating a new Special Compensation System with no cap. Choi Seung-ho, chairperson of the Samsung Electronics branch of the Samsung Group Enterprise-Level Labor Union, said, "Management asked whether we could accept a proposal that was a step back from the post-arbitration plan, but we said we could not."
At the first meeting, the commission presented a review proposal that would add a special reward equal to 12% of operating profit if Samsung also ranked first in revenue and operating profit, on top of the existing OPI. Based on 12% of this year's operating profit, the amount would be about 46 million won per semiconductor employee. If last year's average semiconductor OPI is added, the total would come to about 51 million won. Attention is now also focused on whether labor and management can find a compromise by setting the bonus standard at around 12% to 13% and making appropriate use of stock compensation.
soup@fnnews.com Im Subin Reporter