Samsung Electronics nears agreement with labor union on this year’s pay

[Photo by Yonhap]

Samsung Electronics Co. are likely to reach an agreement with its labor union to raise wages by an average 4.1 percent increase this year, as the two sides have narrowed their differences due to sluggish global semiconductor demand.

According to industry sources on Thursday, both management and the labor union have come one step closer to concluding their talks and likely to agree on a 2 percent increase in basic wages and an additional 2.1 percent rise for performance-based bonuses. The agreement is expected to be concluded as early as Friday, according to sources.

Management initially offered a 1 percent increase, but revised it to 2 percent after strong objection from the union. A sharp fall in the company’s operating profit due to the sluggish chip demand. The company’s preliminary first-quarter operating profit was 600 billion won ($461 million), plummeting 96 percent, according to a regulatory filing on April 7. The company’s loss in its key device solutions division, which include chips, is estimated to be about 4.5 trillion won.

Other changes in the chipmaker’s wage structure this year include twice-yearly traditional holiday allowances incorporated into one’s basic salary. Overtime application hours are also down to 17.7 hours from the existing 20 hours. Up until now, the company has been guaranteeing a 20-hour allowance even for employees whose overtime logs were shorter than 20 hours. Starting this year, employees will receive allowance by hours of overtime worked on top of fixed overtime allowance for 17.7 hours.

Employees who have met the required monthly working hours before end-month will be able to take a paid day off once a month. Employees who enter the wage peak system will face reduced working hours. Currently, the company applies a wage peak system for workers over the age of 57 until the retirement age of 60. Under the system, the company can cut a worker’s yearly wages by 5 percent compared to a year before. The management and the union will also adjust working hours to match the decrease in wages.