The Peninsula

Pushed By Courts, Samsung Reaches First Union Deal

What Happened

• On August 12, Samsung Fire & Marine Life Insurance became the first Samsung affiliate to finalize a collective bargaining agreement with its union.
• Last December, a court sent Samsung Electronics Board Chairman Lee Sang-hoon to prison and charged 25 others at the company with sabotaging union activities. Lee is widely considered to be Samsung Group’s second-in-command.
• A separate court ruling in October also ordered Samsung to present a plan ensuring the company would not break the law again.

Implications: The Korean government’s attitude towards union activism shapes domestic conglomerates’ openness to negotiations with their workforce. Under the pro-labor Moon Jae-in administration, Samsung is the latest company to signal its conformity with the government’s pro-labor posture by accepting collective bargaining. Many other companies permitted their workers to form new unions, including steelmaker POSCO and online search portal Naver.

Samsung may have been further motivated to accept unionization after the country’s courts demonstrated their willingness to levy harsh penalties on Samsung leaders. While the latest deal between Samsung Fire & Marine Life Insurance and its employees does not clearly guarantee negotiations on wages, the government’s persistent support for labor unions will likely lead to more explicit commitments from corporate leadership.

Context: Samsung has been behind the curve on unionization. Competitor LG Electronics has had a union since 1963, and Hyundai Motor employees have been unionized since 1987. In accordance with the October court ruling, an internal compliance commission recommended that Samsung Vice Chairman Lee Jae-yong end the firm’s no-union policy. Since then, workers at many Samsung affiliates established unions and began negotiating with management.

This briefing comes from Korea View, a weekly newsletter published by the Korea Economic Institute. Korea View aims to cover developments that reveal trends on the Korean Peninsula but receive little attention in the United States. If you would like to sign up, please find the online form here.

Korea View was edited by Yong Kwon with the help of James Constant, Sophie Joo, Sonia Kim, and Chris Lee. Picture from flickr account of ETUC CES