Samsung Electronics has reached a consensus with its employees to increase their wages by an average of 4.1%, while the salaries of the board members will remain stagnant due to poor performance, caused by a worsening chip surplus and a global economic downturn.
The company has reached an agreement with employee representatives concerning compensation and labor practices, including reduced working hours for pregnant employees. Both parties took into account the external challenges that led to a drop of almost 96% in profit in the first quarter of the year.
In response, the management postponed the initial proposal to raise the pay cap for board members by 17%.
Since last year, Samsung has been in negotiations about compensation with its unionized workforce, which makes up for 4% of the company’s 110,000 employees.
However, despite ten rounds of negotiations, both parties have yet to reach a settlement.
The management estimated that their operating profit for the period of January through March will reach 600 billion won ($454.9 million), which is a stark decrease from the 14.12 trillion won recorded in the previous year.
Samsung attributed this poor performance to the slow demand for tech devices and customer inventory adjustments.