Samsung Electronics shares surged nearly 8% on Thursday after the South Korean tech giant struck a last-minute wage agreement with its union, averting a planned 18-day strike involving around 48,000 workers, Reuters reported.
The deal, brokered with government mediation, will now be put to a union vote between May 22 and May 27. Union leadership has expressed confidence that members will ratify the agreement.
The development brought relief to markets and policymakers in South Korea, where Samsung accounts for nearly a quarter of the country's exports. Analysts had warned that a prolonged strike could disrupt global semiconductor supply chains and impact the domestic economy.
According to Reuters, the agreement includes special bonuses for workers in Samsung's chip division, covering memory and logic semiconductor businesses. The company is expected to allocate around 10.5% of the division's operating profit toward these incentives.
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A union source told Reuters that a memory chip employee earning a base salary of 80 million won could receive a bonus worth nearly 626 million won (about $416,000), largely in company stock.
The bonuses, however, are tied to long-term performance targets. A document reviewed by Reuters showed the payouts would remain stock-based for at least 10 years and depend on the chip division achieving annual operating profit of over 200 trillion won between 2026 and 2028, and over 100 trillion won from 2029 to 2035.
“While investors are relieved that the strike appears to have been avoided, the agreement will substantially increase labour costs,” Reuters quoted Ryu Young-ho, senior analyst at NH Investment & Securities, as saying.
On the positive side, Ryu noted that issuing bonuses in stock rather than cash could ease Samsung's immediate financial burden. The union had scaled back its earlier demand seeking 15% of operating profit to be earmarked for bonuses.
Samsung Electronics chip division chief Jun Young-hyun, in a letter, urged employees to “leave behind this time of conflict” and work together to strengthen the company's “global competitiveness and long-term growth.”
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