On the 21st, at a rally of Samsung Electronics shareholders held in front of the residence of Samsung Electronics Chairman Lee Jae-yong in Yongsan-gu, Seoul, officials from 'Korea Shareholders' Movement Headquarters,' a Samsung Electronics shareholder group, are holding signs. On this day, the Shareholders' Movement Headquarters declared the tentative agreement between Samsung Electronics management and labor on wage negotiations illegal and foreshadowed legal action.  [Photo=Yonhap News]

Samsung Electronics management and labor signed a tentative agreement at 10:44 PM on the 20th, the day before the scheduled full-scale strike. 

Although the Central Labor Relations Commission's proposed mediation was not finalized due to the union's non-consent and the company's reservation, management and the union subsequently signed a separate tentative agreement during additional negotiations chaired by Minister of Employment and Labor Kim Young-hoon. 

As a result, the union decided to temporarily suspend the planned full-scale strike and proceed with a member ratification vote. However, the negotiations will only be officially concluded if the tentative agreement is approved in the member vote. 

The core of this issue is not simply that the strike has been postponed. A more important question is the mediation standards of the government and the Central Labor Relations Commission. 

‘Why was the Central Labor Relations Commission's mediation proposal not disclosed? Why did the company reserve the proposal that the union agreed to? How much did the tentative agreement subsequently signed by management and labor differ from the Central Labor Relations Commission's mediation proposal?’

The Samsung Electronics labor-management dispute went beyond private company wage negotiations, extending to the semiconductor supply chain, the national economy, and the consideration of the government's emergency mediation authority. Despite this, the key contents of the mediation process remain outside public scrutiny. 

Mediation Proposal Unresolved, Tentative Agreement Signed

The negotiation process can be divided into two stages. 

The first is the Central Labor Relations Commission mediation stage. According to reports, the CLRC presented a mediation proposal to Samsung Electronics management and labor, to which the union agreed, but the company did not disclose its acceptance, instead reserving its decision. For this reason, the CLRC mediation was not finalized. 

The second is the additional negotiation stage chaired by the Minister. 

After the CLRC mediation failed, Minister of Employment and Labor Kim Young-hoon directly chaired the negotiations, and on the night of the 20th, the company representatives and the union representatives signed a tentative agreement. 

A member ratification vote by the union is still pending. The union plans to conduct a '2026 Wage Agreement Tentative Agreement Ratification Vote' from 2:00 PM on May 22nd to 10:00 AM on May 27th. If approved, the negotiations will enter the finalization phase, but if rejected, the tentative agreement could be thrown into jeopardy again. 

The issue was not wage increases, but the performance bonus formula.

The superficial issue of this conflict was not the wage increase rate but the performance bonus for the DS (Device Solutions) division.  

The union demanded an expansion of the performance bonus pool based on the DS division's operating profit and a structure that approached the abolition of the upper limit, while the company sought to maintain the existing Employee Bonus (OPI) system and the principle of performance-based pay by business unit. 

The tentative agreement represents a compromise from both sides. 

According to the reported agreement, the performance bonus is divided into the existing OPI and a special management performance bonus for the DS division. The pool for the DS division's special management performance bonus will be set at 10.5% of the business performance agreed upon by management and labor, and there will be no upper limit on the payout ratio. The pool distribution is structured with 40% for the entire DS division and 60% for each business unit. 

The key lies in the distribution method. 

Within the DS division, there are significant performance differences between business units such as memory, foundry, and system LSI. The conflict point was how much of the performance of profitable business units would be shared with the entire DS division and what criteria would be applied to unprofitable business units. 

The tentative agreement has been finalized in a direction that defers the application of penalties to unprofitable business units for one year, to be applied from the 2027 portion. 

Ultimately, the essence of this negotiation was not "how much more to give," but a question of how to divide performance among the company, shareholders, business units, and employees based on what criteria. 

The reason the company could not immediately accept the CLRC's mediation proposal may involve not only the cost burden but also the principles of performance-based pay, internal decision-making processes, and the burden of future precedents. 

Government Pressure Was Present, But Standards Were Unclear

Government pressure was strong. 

On the 17th, Prime Minister Kim Boo-kyum stated in a public address that if a situation arose where Samsung Electronics' strike threatened to cause immense damage to the national economy, the government would explore all available response measures, including emergency mediation. On the 18th, he described the CLRC's post-mediation efforts as a "virtual last chance." 

Emergency mediation is a powerful tool. According to the Labor Union and Labor Relations Adjustment Act, the Minister of Employment and Labor can decide on emergency mediation when a labor dispute seriously harms the national economy or poses an imminent risk to the daily lives of citizens. 

Once an emergency mediation decision is announced, the parties involved must immediately cease labor disputes and cannot resume them before 30 days have passed since the announcement. 

Therefore, this matter cannot be viewed solely as a matter of autonomous negotiation. 

The government publicly hinted at the possibility of considering emergency mediation, and after the CLRC mediation failed, the minister directly chaired additional negotiations. 

However, the specific details of the CLRC's mediation proposal were not disclosed. The necessity of government intervention was explained under the guise of protecting the national economy, but the mediation standards were not adequately explained. 

This is the most critical issue in the article. 

The government can intervene in a large-scale labor dispute at a semiconductor company, which is a key national industry. However, if that intervention is made in the name of protecting the national economy, at least an explanation of the criteria used to mediate between both parties is necessary. 

The undisclosed mediation proposal leaves questions such as "To what extent were the union's demands reflected?", "What principles led the company to reserve its decision?", and "How did the final tentative agreement differ from the mediation proposal?" 

The Majority Union and Union Shop Behind the Performance Bonus

This negotiation is also intertwined with a structural change in Samsung Electronics' labor-management relations. 

In April, the Samsung Electronics Branch of the Samsung Group Super-Enterprise Union declared its status as a majority union, based on its membership of 75,300. Following the declaration of majority union status, the union has mentioned the introduction of a union shop as its next goal. 

A union shop is not merely a slogan for union expansion. Under the current interpretation, it is an exceptional system that allows a labor union representing two-thirds or more of the workers in a workplace to make membership in a specific union a condition of employment through a collective agreement with the employer. 

The Ministry of Employment and Labor's administrative interpretation also considers union shop agreements to be conditional on two-thirds or more of the workers in the workplace being members of the labor union. 

Therefore, this performance bonus negotiation is not a simple wage negotiation. 

It is an event that demonstrates the extent of the bargaining power that the Samsung Electronics union, now a majority union, can exercise in its first major negotiation. 

From the company's perspective, this tentative agreement could become the benchmark for future wage and performance bonus negotiations, and from the union's perspective, it could serve as an opportunity to strengthen its organizational base for pursuing a union shop. 

In that regard, this matter cannot be summarized merely as "Samsung Electronics management and labor avoided a breakdown." 

Although it may seem like just a change in the performance bonus formula, behind it lies a trend of reorganizing the labor-management power structure within Samsung Electronics. 

The Remaining Question is the Standard

Samsung Electronics management and labor signed a tentative agreement on the night of the 20th. The union has temporarily suspended the full-scale strike, and depending on the results of the member ratification vote, the negotiations may be finally concluded. However, questions remain. 

“Why was the Central Labor Relations Commission's mediation proposal not disclosed?

Why did the company reserve the mediation proposal that the union agreed to?

What were the differences between the tentative agreement reached during the additional negotiations chaired by the minister and the CLRC's mediation proposal?

If this was a matter where the government intervened by mentioning emergency mediation, what were the criteria for that intervention?”

The significance of this agreement lies not only in the postponement of the strike. 

It lies in the fact that Samsung Electronics' labor-management relations have entered the era of majority unions, and are entering a new phase intertwined with principles of performance bonus distribution and the possibility of pursuing a union shop. 

Even if the tentative agreement passes the member vote, these questions will not disappear. 

The issue is not money, but standards. 

The biggest question remaining after Samsung Electronics' tentative agreement is whether those standards can be disclosed and verified.