Samsung Electronics union sticks to strike plan despite talks offer; shares slide

SEOUL – Samsung Electronics’ South Korean labour union said on May 15 it remained committed to a planned strike starting next week, even after the company proposed resuming pay talks without conditions, sending shares down as much as 5.9 per cent.

Government-mediated negotiations between the two sides over pay and bonus schemes collapsed this week, heightening concerns about a strike at the world’s biggest memory chipmaker.

The union on May 15 said it was willing to hold new talks after June 7, while maintaining plans for an 18-day strike from May 21 that could disrupt production at the company.

Analysts attributed the share drop to growing uncertainty over the potential impact of a strike and concerns about Samsung’s ability to meet its commitments to customers.

“There appears to be rising concerns over delivery reliability if the strike takes place and sentiment that rivals could benefit from the uncertainty,” said Mr Ryu Young-ho, a senior analyst at NH Investment & Securities.

The prospect of a strike appeared to be increasing as the company did not seem to be presenting fresh proposals to the union, he added.

In a statement, Samsung Electronics confirmed its offer of unconditional talks, though it did not immediately provide further comment.

South Korea’s Labour Commission has called on the two sides to hold another round of government-mediated talks on May 16.

The union had said it would sit down for talks only if the company presented a detailed proposal addressing its demands by 0100 GMT (9am in Singapore) on May 15.

Angry over what it calls a massive gap in bonus pay compared with rival chipmaker SK Hynix, the union has warned that more than 50,000 workers could walk off the job next week.

Government officials, including the prime minister and finance minister, have voiced concerns that a strike could pose significant risks to economic growth, exports and financial markets.

Industry Minister Kim Jung-kwan said on May 14 a strike would cause irreparable damage to the economy and that emergency arbitration could be unavoidable.

Under South Korean law, only the labour minister can invoke emergency arbitration powers. Labour Minister Kim Young-hoon has stressed the need for dialogue between the company and the unions.

JPMorgan said the production impact of a strike could be higher than previously anticipated, reflecting the union’s expectation of broader worker participation.

JPMorgan estimated the impact on Samsung’s operating profit at 21 trillion won (S$17.9 billion) to 31 trillion won while sales losses could stand at about 4.5 trillion won. REUTERS