Samsung’s wage freeze may cause ripple effectA day after Samsung Electronics announced it would freeze salaries for this year due after bad results in 2014, other companies under the Samsung umbrella followed suit Friday. A ripple effect is feared across Korea’s corporate landscape.
Samsung Display, Samsung Electro-Mechanics and Samsung SDI said Friday they would also jump on the wage-freeze bandwagon and Samsung C&T and Samsung Engineering are expected to reach the same conclusion imminently.
Korea’s biggest company by market cap said Thursday its labor-management council agreed not to raise wages this year. The measure came after some 2,000 executives at Samsung affiliates volunteered earlier to receive the same amount of pay as last year.
“Labor and management have arrived on the same page regarding the need to strengthen internal competitiveness to break through the unpredictable economic situation,” said a Samsung Electronics spokesman.
The wage freeze at Samsung Electronics, which will affect the period between March and next February, is the first since 2009, when Korea struggled with the aftermath of the global financial crisis that began the year before.
The world’s No. 1 smartphone vendor saw its operating profit for fiscal year 2014 slashed by 32 percent from a year earlier to 25 trillion won ($22.8 billion) as fast-growing Xiaomi and its archrival Apple aggressively competed.
Following the salary decision, the vice chairman and two CEOs of Samsung Electronics sent a joint email to the entire staff saying they were grateful that employees endorsed the plan.
The labor-management agreement was not automatic. Representatives of the employees initially said salaries should be raised at least as high as the mild rate of inflation. Management persuaded them by saying the circumstances were truly bleak. Wage increases at Samsung Electronics have been above the inflation rate in recent years. But some workers already had their performance incentives shrunk in January.
Oil refiners were ahead of Samsung Electronics. Late last year, SK Innovation decided to freeze salaries after its union approved it and Hyundai Oil Bank and S-Oil followed suit. The three companies swung into the red last year on slumping oil prices.
But LG Electronics’ labor and management clinched a deal to raise wages by 4 percent on the same day as Samsung Electronics froze its wages. The nation’s second-largest smartphone producer cited the importance of investing in human resources to prepare for the future.
BY SEO JI-EUN [firstname.lastname@example.org]