As Samsung Electronics labor and management drew up a tentative agreement that includes paying performance bonuses averaging about 600 million won per person based on the memory division, calls to revamp compensation systems are spreading among major affiliates. At Samsung Electro-Mechanics and Samsung Display, there is a growing mood of demands to change the standards for calculating bonuses and to expand compensation.
According to the industry on the 25th, Samsung Electro-Mechanics plans to soon collect opinions from employees on a plan to change the standard for calculating the over-profit incentive (OPI) from the current economic value added (EVA)-centric approach to either 20% of EVA or 10% of operating profit.
This is seen as the result of the Samsung Electronics labor union demanding the application of an operating-profit standard, which is more transparent than the existing EVA method, and management partially accepting it in the recent tentative agreement on wages and collective bargaining. There is analysis that similar calls to overhaul the performance bonus system are growing within Samsung Electro-Mechanics.
Within Samsung Electro-Mechanics, complaints over bonuses have already been raised. Despite recording more than 600 billion won in operating profit in 2023, Samsung Electro-Mechanics paid a bonus equal to about 1% of annual salary, prompting backlash among some employees.
In particular, expectations for improved results are growing this year on the back of increased sales of substrates and multilayer ceramic capacitors (MLCC), key components of AI Semiconductor chips. The industry expects Samsung Electro-Mechanics' annual operating profit to rise to about 1.5 trillion won, and accordingly, demands to expand bonuses are forecast to grow further.
Samsung Display also plans to hold labor-management talks in the second half of this year to introduce a compensation program to replace performance bonuses. As Samsung Electronics accepted a plan to pay bonuses of more than 100 million won even to its loss-making non-memory division, fairness controversies are said to be emerging within affiliates suffering weak results.
In fact, within Samsung SDI, there are reports of challenges to the fairness of the compensation system irrespective of business performance.
Conflicts related to compensation appear to be spreading to other affiliates. Samsung C&T's construction division concluded talks only after raising the wage increase rate from the previous 3% level to 4.3%, and the Samsung Biologics union is currently conducting a work-to-rule campaign after a first strike. There is analysis that the settlement of wages and collective bargaining at Samsung Electronics is having a ripple effect on compensation system discussions across the group.