Giant strike at Samsung was suspended before it started

Samsung’s largest workers’ union in South Korea suspended the strike, which was planned to start on May 21, after a temporary agreement was reached in bonus negotiations with the company. The strike, in which approximately 48 thousand employees were expected to participate and was planned to last 18 days, had the potential to directly affect Samsung’s memory chip production unit. It was considered that any production disruption in this unit, which is one of the highest-income generating departments of the company, could affect not only Samsung but also the South Korean economy. The union management announced that the agreement has not been finalized yet and that the final decision will be made after the vote of the employees.

According to the statement made by Choi Seung-ho, leader of the Samsung workers’ union, members will vote on the interim agreement between May 22-27. Majority support must be achieved for the final agreement to come into force. Samsung stated in its statement that they aim to establish a more constructive employer-employee relationship. In the company’s statement, it was stated that a more mature working environment would be created to prevent a similar process from happening again. Despite this, it seems too early to say that the tension between the parties is completely over.

The main reason why employees decided to strike was dissatisfaction with the bonus system. The union was demanding the removal of the upper limit on employee bonuses, which is limited to 50 percent of the annual salary. The fact that rival semiconductor manufacturer SK Hynix has lifted similar restrictions has raised the expectations of Samsung employees. In addition, the union wanted 15 percent of the company’s annual operating profit to be transferred to the bonus pool. Union representatives argued that SK Hynix employees received bonuses three times higher than Samsung staff last year. It is also stated that some Samsung employees moved to a rival company due to this wage difference.

Samsung employees will be given a 10.5 percent share of operating profits

According to information provided by Reuters, Samsung agreed to remove the bonus cap and allocate 10.5 percent of its annual operating profit to employees. According to Yonhap News, 40 percent of the bonus pool will be distributed to employees in the memory chip department. The remaining 60 percent will be shared among Samsung’s other business units. Although this rate remains below the 15 percent level demanded by the union, it exceeds the 10 percent share distributed by SK Hynix to its employees.

Another noteworthy detail in the agreement was that bonus payments were tied to certain financial targets. Accordingly, in order for employees to receive bonuses, Samsung’s memory unit must make a profit of at least 200 trillion South Korean won between 2026-2028 and at least 100 trillion won between 2029-2035. In addition, it is stated that Samsung will make some of the bonus payments in the form of company shares for at least 10 years. Thus, it is aimed to engage employees in the company’s performance in the longer term.

After the possibility of a strike came to the fore, the South Korean government was directly involved in the process. Minister of Labor Kim Young-hoon mediated the negotiations, which resumed just a few hours after the strike decision was announced. Considering Samsung’s weight in the country’s economy, it was no surprise that the government quickly intervened in the process. It is stated that the company accounts for approximately 12.5 percent of South Korea’s gross domestic product. In addition, Samsung is the world’s largest memory chip manufacturer.

The company posted an operating profit of 53.7 trillion won in the first quarter of 2026 alone. South Korean Prime Minister Kim Min-seok had previously stated that the direct cost of a possible 18-day strike could reach approximately 1 trillion won. On the other hand, it was stated that if the semiconductors in the production line became unusable, the total economic impact could reach up to 100 trillion won. For this reason, the fact that the parties are approaching a compromise is considered a critical development in the short term for both Samsung’s production plans and the South Korean technology sector.