Samsung cuts pay hike to average 4.1 per cent, freezes raises for board members
Samsung Electronics’s management and its workers have agreed to an average 4.1 per cent pay raise for the year, while effectively freezing raises for its board members due to poor performance amid a worsening chip glut and a global slowdown.
The pay raise is lower than the 9 per cent wage hike of the previous year, which was the highest in a decade, and lower than the initial demand from the workers. The world’s largest memory chip and smartphone maker reached an agreement with representatives of its employees over wages and other labour policies, including extending shortened working hours for pregnant employees.
The announcement was said to be made internally earlier in the day, according to the sources, reports Yonhap News Agency. Both parties hammered out the compromise, taking into consideration the external headwinds that caused the quarterly profit to plunge nearly 96 per cent in the first quarter.
The management decided to apply last year’s pay policy for board members, effectively putting off its initial plan to raise the pay ceiling for board members by 17 per cent. Separately, Samsung’s unionised workers, which accounted for around 4 per cent of the total 110,000 workers, have engaged in wage negotiations with the management since late last year.
The two parties have so far held 10 rounds of negotiations but could not iron out differences. Last week, Samsung said it has cut memory production in the short term, as its quarterly profit plunged significantly (likely 96 per cent) amid the chip downturn, in a sharp departure from its previous position that it would not artificially reduce output.
The world’s largest memory chip and smartphone maker estimated its January-March operating profit at 600 billion won ($454.9 million), sharply down from 14.12 trillion won a year ago. Samsung blamed sluggish demand for tech devices, coupled with customers’ inventory adjustment, for the poor performance.