July 16, 2024
Samsung are likely to need rapid legal advice after their workers increased the scale and intensity of their continued strike this week – thousands are hitting the picket lines.

Samsung: a brief profile

‘Samsung’ itself is a chaebol. This is the word used in South Korea for a complex business structure whereby a large (often industrial) conglomerate is often headed up by an influential individual or family who control numerous smaller entities within it.

This is a relatively common framework for businesses in South Korea – the government’s First Five Year Economic Plan in the 1960s encouraged their formation and offered incentives like guaranteed bank loans. The government has close ongoing ties to many of these influential families, who are seen to help modernise the economy and drive both financial and even political (for example diplomatic) improvements for South Korea.

On the other hand, they are widely criticised for imposing monopoly-like conditions in certain industries, and for opaque and ethically questionable practices at times. Samsung is the largest chaebol in South Korea today, making up about 17% of the country’s entire GDP.

This story (regarding the ongoing strikes), however, is referencing the Samsung Electronics business specifically (making up about 70% of the overall Samsung business by revenue – a hugely important part). It is the largest manufacturer of both smartphones and televisions on the planet, and also has significant footholds in tablets, cameras, kitchen appliances, and more. In recent years, amidst the AI (artificial intelligence) boom in particular, they have become particularly known for their chips and semiconductors, which form a crucial part of the infrastructure needed for many AI-based products. 

What are the reasons for this strike?

The current strike is being led by the National Samsung Electronic Union (NSEU), who represent Samsung Electronics workers. It currently maintains a roster of around 30,000 members, and over 6,000 have already directly joined the strikes (making it the largest labour action in the company’s history). A three-day general strike has already taken place, and following a supposed silence from the tech giant (contradictory to their claims that talks were underway with the protesters), the union has called on its members to band together and strike indefinitely until demands are met.

The main reasons for the strike at present are cited as low wages and minimal benefits. Staff reportedly feel that Samsung’s increased profits should be feeding into their pay packets more than is currently occurring, especially in comparison to other comparable tech companies in the region who have been acting accordingly. Specifically, the NSEU want additional paid vacation days and a 3.5% pay rise.

Further claims have been made around the effect that gruelling overtime expectations and performance monitoring systems are having on staff (many of them young women), including physical injuries being developed as a result of the manual labour work involved over such long hours. In response, Samsung claims it complies with the Occupational Safety and Health Act fully. 

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What have the responses to the Samsung strike been so far?

Samsung has generally experienced significant growth in recent times (particularly in light of the growing demand for semiconductors, as already mentioned), leading to a share price increase of 7.5% this year so far. In a recent announcement, the company assured investors that its operating profits would potentially be increasing by over 1000% YoY, a hugely positive prediction. However, the market has shown some nerves in response to this developing story – shares have dipped on the Korea Stock Exchange now as a result.

Naturally, Samsung has sought to downplay the impact the strikes are having. A spokesperson from the company has attempted to assure investors (and the general public) that any disruption faced has been minimal (‘Samsung Electronics will ensure no disruption occurs in the production lines’), and that they were positively engaging with protestors to reach a solution (there have been some suggestions that a pay increase was offered, although lower than the 3.5% being requested).

NSEU, on the other hand, claims that their strikes have already made a significant dent on production numbers, and criticised leadership for their lack of a positive response. Note that Samsung famously refused to allow unions at all until 2020, so does not maintain a particularly polished record in this area. 

What should lawyers take from the ongoing Samsung strikes?

As part of their upcoming applications to legal opportunities such as vacation schemes, training contracts and pupillages, tomorrow’s solicitors and barristers can mine a variety of points from this story – both on application forms and at interview. 

Generally, this story acts as a useful source of commercial awareness. All aspiring lawyers (but particularly those applying to corporate-focused organisations such as elite US or Magic Circle law firms) are encouraged to stay on top of business news, and the fact that one of the world’s leading tech companies is facing such wide-scale protests from within its own ranks is therefore highly significant – something you’d likely be expected to be aware of, at least. In order to develop your knowledge of such stories, it is important to stay on top of the headlines from sources such as our blog, or respected newspapers like The Economist or Financial Times (paid resources, though your educational institution might pay for group access on your behalf). 

With that sense of commercial awareness in mind, aspiring lawyers could discuss how Samsung need to balance their legal rights as an employer with the need for positive PR and maintaining a polished public image. Today’s lawyers need to understand that seeking the most draconian remedy possible is not always the best move when customers (and investors) are watching on with keen interest.

This story also ties in nicely with a number of practice areas that aspiring lawyers can point to as having relevance to here.

First, corporate lawyers will be needed in order to initially unpack the way Samsung operates (for example, its complex chabeol structure), since this may well affect the legal approach which they will be able to take in response.

Second, employment lawyers will obviously be at the heart of any legal issues arising here – questioning which rights these employees have, and how Samsung should positively engage with them in order to seek a positive resolution.

Amidst any practice area, there also needs to be an understanding that Samsung operates across a variety of different territories (and therefore legal systems) too, meaning a cross-jurisdictional approach to issues like workers’ rights (if the protests were to spread elsewhere too) might be necessary further down the line (something top lawyers would be pre-emptively considering). 

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