Samsung Strike Risks Disruption to South Korea’s Economy and Chip Supply
Overview and Key Details of the Samsung Strike
By Jack Kim
SEOUL, May 20 (Reuters) - Samsung Electronics' labour union plans to embark on a massive 18-day strike on Thursday after bonus payment talks with management collapsed and attention is now focused on whether the government will issue an emergency arbitration order.
Some 48,000 people plan to walk off the job with significant consequences for the South Korean economy and the supply of memory chips globally, and the government flagged at the weekend that such an order is possible.
Emergency Arbitration Order: What to Know
Here are some things to know about the potential order:
What Have Authorities Said?
A South Korean government official said on Wednesday that talk of emergency arbitration is premature and that there was still time for dialogue.
The government is seen as union-friendly as President Lee Jae Myung is a former youth labourer who was injured on the job.
But Lee said on Wednesday that a certain union was "crossing the line" when it claimed a share of a company's operating profit even before income tax is paid.
"There is a role for the government when anyone crosses the line to make sure they conduct themselves responsibly for the good of the larger community," he told a cabinet meeting.
What Does the Emergency Order Involve?
An emergency arbitration order has been invoked just four times in modern South Korean history. It puts a strike on hold for 30 days and requires both sides to continue talks mediated by the government's National Labor Relations Commission.
The government can resort to such an order if it considers a strike would result in "significant injury to the national economy".
If the commission considers that mediation has failed, the next step is an arbitration process under a separate panel that will hear from both parties before making a binding decision.
Anyone refusing to comply faces up to two years in prison or a 20 million won ($13,300) fine.
The last time the measure was invoked was in 2005 when Korean Air pilots walked off the job but agreed to a compromise pay hike after four days.
Potential Impact of a Samsung Strike
Economic and Global Supply Chain Effects
Samsung accounts for almost a quarter of the country's exports. It is also the world's largest memory chip maker and production disruptions could dent global supply at a time when the AI boom has caused shortages.
The strike could in a worst-case scenario shave 0.5 percentage points off a forecast 2.0% expansion for the South Korean economy this year, according to an official from the country's central bank, who declined to be named.
South Korean officials have also said a major disruption of production at Samsung Electronics would translate to up to 1 trillion won ($665 million) in daily losses for the company.
Political Fallout and Broader Implications
Upcoming Elections and Political Dynamics
South Koreans go to the polls on June 3 to elect mayors and governors across the country and the strike has the potential to sway swing districts. Currently, Lee's liberals are expected to dominate.
The liberals are wary that they may lose labour votes, their traditional support base. Lee also wants to capture the moderate Gyeonggi province, which has seen its economy boom thanks to the tens of thousands who work at Samsung facilities there.
Union Solidarity and Labour Movements
Samsung's union, launched just two years ago, is not affiliated with any of South Korea's major labour federations but some of the more established and militant unions have vowed to act in solidarity.
($1 = 1,504.9000 won)
(Reporting by Jack Kim; Editing by Edwina Gibbs)
