Samsung unit upgrades 8,000 to real payroll

Samsung Electronics Service, a subsidiary of Samsung Electronics, will directly hire 8,000 workers from around 90 of its subcontractors amid ongoing controversy over its anti-union policy.

Those thousands of contract workers will have their status changed to full employees of Samsung Electronics Service, in which Samsung Electronics owns a 99.33 percent stake.

Samsung Electronics Service reached the decision after negotiations with the Korean Metal Worker’s Union, the biggest umbrella union in Korea, which has a branch at the company.

“Samsung Electronics Service will guarantee lawful labor union activities and both management and the labor union have decided to make joint efforts to ease conflict and make future-oriented progress,” said the company in a statement.

The company went on to say that the direct hiring will improve the quality of employment and service for customers.

Samsung plans to talk with the 90 companies, which will be losing not only workers but in some cases whole business, to come up with a proper level of compensation.

The world’s No. 1 smartphone producer is following in the footsteps of other leading businesses by putting contract workers on the full payroll. But the scale of the decision is the largest yet.

SK Broadband, the internet and TV service arm of top telecom operator SK Telecom, took the lead last May and upgraded 5,200 non-salaried workers from its subcontractors into staff jobs. Top automaker Hyundai Motor subsequently hired 6,000 non-regular workers from subcontractors and has set a goal to employ an additional 3,500 through 2021. Both of those companies established subsidiaries to hire the workers, unlike Samsung, which opted for direct employment.

Contract workers and subcontractors have been a controversial issue for large businesses for a long time. Some wear the same uniform at work as salaried employees but their working conditions including salary are below-standard and they have no job security. They have been demanding improvements, and the labor-friendly Moon Jae-in administration has made such upgrading a signature initiative.

Samsung has been under mounting pressure to change its labor policy after being accused of sabotaging efforts of workers at affiliates to strengthen their labor unions.

Reopening a case dating back to 2015, prosecutors raided Samsung Electronics Service headquarters in Suwon, Gyeonggi, on April 6 to find evidence for that allegation. Samsung contacted the umbrella union to talk about its reform plans a few days back in a rushed bid to prevent the probe from getting bigger, according to people familiar with the matter.

Insiders in the chaebol community say Samsung’s decision on Tuesday marks the end of an era for Korea’s No. 1 conglomerate’s well-known reluctance to legitimize labor unions and its adherence to the principle of “labor union-free management” - despite the presence of some unions. Subsidiaries under the Samsung umbrella that have their own labor unions include Samsung C&T, Samsung Welstory and S1, in addition to the Samsung Electronics Service.

BY SEO JI-EUN [seo.jieun@joongang.co.kr]