For the first time in its 55-year history, Samsung Electronics Co ( SSNLF ) faced a strike from its largest union, marking a significant moment in the tech giant’s labor relations.

The National Samsung Electronics Union, representing around 28,400 workers, initiated the action over a longstanding pay dispute, pausing all negotiations, reported Bloomberg.

The union urged members to take a day off on Friday, strategically placed between a public holiday and the weekend, with plans to resume normal operations next week.

The move is described as a “soft start" by union deputy secretary general Lee Hyun-kuk, with potential for more strikes if management remains unresponsive, the report addded.

The core of the conflict lies in the distribution of bonuses, especially for employees in Samsung’s semiconductor division, who missed out last year due to large financial losses.

Samsung’s method of calculating bonuses, which factors in the cost of capital and taxes on a cash basis, has been a point of contention.

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The union demands a simpler, more transparent calculation based on operating profit, similar to other companies in the industry. This change is crucial as bonuses form a substantial part of employee compensation.

The debate also touches on broader issues of whether Samsung values shareholder profits over worker contributions. Despite the strike, Samsung maintains that its negotiations are conducted in good faith and reports no impact on production or management.

Samsung is navigating multiple challenges, including a drop in operating profit and competition from smaller rivals like SK Hynix Inc., which has outperformed in the high-bandwidth memory chip market. The company’s stock has seen a slight decline this year, exacerbating tensions among its numerous retail investors.

Analysts attribute Samsung’s success partly to its control over labor activism, contrasting it with other conglomerates, which faced more militant labor actions, per the report.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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