Samsung

Samsung has record revenue, now its employees want a big pay rise

Samsung has record revenue, now its employees want a big pay rise

SEOUL—More than 100,000 members of Samsung Electronics Co.’s professional workforce asked a bold question: Give us a nearly 16% raise.

From semiconductor engineers to smartphone designers, Samsung employees based in South Korea – nearly half of its global workforce – are demanding their biggest base pay rise in the company’s history, according to reports. current and former employees, as well as internal communications among colleagues reviewed by The Wall Street Journal.

Employees cite the rising cost of living, improved labor productivity and the tech giant’s high earnings as reasons for wanting a 15.7% increase in base salary, according to internal communications the companies said. negotiators have sent this month to their colleagues. They are also looking to improve other social benefits, such as expanded family health care coverage, the post says.

The latest demands come as Samsung faces a new group of tech challengers who are courting workers in its home country of South Korea, changing expectations for younger employees and splitting wage negotiations with the industry’s earliest unions. company, according to Samsung employees and observers.

Samsung, based in Suwon, South Korea, declined to comment on the forces behind workers’ wage demands or growing competition. But he confirmed talks were continuing with unions and with the works council, where representatives of Samsung’s South Korean employees and management meet every year to decide pay and other benefits. The company is “making every sincere effort to reach an agreement,” Samsung said.

Buoyed by a strong year for semiconductors and resilient smartphone demand, Samsung posted its best annual sales of around $233 billion in 2021, an 18% increase from the previous year. . Net profit for the year also increased by more than 50%.

Samsung, which has prioritized the retention of younger employees, has worked to share the gains from the strong performance with its workforce. Late last year, the company cited special bonuses for workers as a reason for issuing operating profit forecasts that fell short of expectations.

Samsung has long operated without a workers’ union. Over the years, a handful of employee representatives from Samsung’s major business divisions have held annual works council talks with management on workers’ wages and demands.

Last year, workers demanded a 6.36% increase in base pay before both sides agreed to a 4.5% increase in base pay and other incentives linked to individual performance. employees.

Workers around the world are seeking more pay and other benefits amid rising inflation, labor shortages and growing competition. This is especially true in the tech sector, which has seen strong profits throughout the pandemic, as businesses have benefited from major shifts in the way people work, learn and play. Some tech giants are even now turning to cash, rather than stock options, as a way to attract and retain talent.

Tens of thousands of American workers are on strike and thousands more are trying to unionize. WSJ examines the roots of this new work activity and speaks with a labor economist for more context on the changing labor landscape in the United States. Photo: Alyssa Keown/AP

For decades, Samsung has hand-picked South Korea’s brightest college graduates and kept them, giving them generous salaries, perks and advantages over local competition, according to former executives and industry watchers. business. More recently, other internet companies and startups across the country have been successful in attracting workers by touting more relaxed work environments, competitive wages and perks like stock options, they say.

“Work-life balance is more important. Young workers care more about money than pride,” said Chang Sea-jin, author of books on the rise of Samsung and professor of business at the National University of Singapore.

Samsung’s relatively new group of challengers in the broader tech sector include e-commerce player Coupang Inc., which went public last year in the US in one of the year’s biggest listings, and local mobile phone giant Kakao Corp., whose founder recently took the title of South Korea’s richest individual – becoming the first non-Samsung executive to hold the accolade in more than a decade.

Last year, South Korean internet and tech companies greenlighted major pay rises to attract talent as business boomed during the pandemic, putting pressure on others to match, said Nam Sung-woon, a former human resources director at Samsung who serves as CEO of Cucurbita Inc., a Seoul-based company that consults with job seekers.

Samsung is grappling with a new group of tech challengers courting workers in South Korea.


Photo:

kim hee chul / Shutterstock

“Samsung Electronics employees say, I work for a leading global company. But why should I be paid less than these smaller companies?” Mr. Nam said.

Samsung Electronics’ average annual compensation per person was 127 million won, or about $106,000, in 2020, according to its annual report. But its once-large pay gap with other South Korean tech peers has narrowed in recent years, according to independent salary estimates based on public disclosures.

South Koreans are also exchanging information about pay and working conditions in different companies and industries like never before, according to a recent report by the government-funded Korea Labor Institute. They use apps like Blind, which is sort of a cross between LinkedIn and Glassdoor, where employees can comment anonymously after providing their company email.

Samsung is the world’s largest manufacturer of smartphones, semiconductors and televisions. It sells products in almost every country in the world. But keeping talent in their country of origin is particularly important.

Virtually all of Samsung’s top executives are South Korean. Touting the need for fresh ideas late last year, Samsung replaced its co-CEOs who had spent decades rising through the ranks with executives who largely matched the same profile but were only a few years old. less.

Within Samsung’s South Korean workforce, the first attempt at collective bargaining – and activism – is underway.

Over the years, dozens of senior officials, including the former chairman of the board of Samsung Electronics, have been found guilty of union busting. The president, who appealed, was later acquitted. In 2020, Lee Jae-yong, Samsung’s twice-imprisoned de facto executive, issued an unprecedented apology for a variety of shortcomings and to “everyone who has been hurt by labor issues at Samsung.” Mr. Lee also promised that workers could bargain collectively and participate in peaceful rallies.

Last year, Samsung officially recognized unions for the first time, paving the way for the creation of four groups representing a diverse range of the companies’ workforce. Their collective membership represents around 4% of Samsung’s workforce in South Korea.

The unions’ wage negotiations are separate from the wider group’s demand for a 15.7% increase in base wages. One of the unions’ main demands is to give each member a lump sum annual salary increase of 10 million South Korean won, the equivalent of about $8,350.

Those talks have stalled with management, say union leaders, who have threatened more drastic action.

“We also don’t want to have to shut down our semiconductor lines…but if that becomes our only option, we’re ready to strike,” labor leader Lee Hyun-kuk said at a press conference. a recent press conference in front of Samsung. offices in downtown Seoul.

Write to Jiyoung Sohn at [email protected]

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