New Delhi: Samsung Electronics’s management and its workers have agreed to an average 4.1 percent 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 percent 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 labor policies, including extending shortened working hours for pregnant employees. (Also Read: Amazon, Google CEOs ‘Hint’ At More Layoffs Amid Economic Meltdown)
The announcement was said to be made internally earlier in the day, according to 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 percent in the first quarter. (Also Read: This AI-Based Smartphone App May Help You Quit Smoking)
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 percent.
Separately, Samsung’s unionized workers, which accounted for around 4 percent 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 the differences.
Last week, Samsung said it has cut memory production in the short term, as its quarterly profit plunged significantly (likely 96 percent) 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 adjustments, for the poor performance.