SEOUL, May 15 (Reuters) – The South Korean union of Samsung Electronics, , affirmed this Friday that it remains committed to the strike scheduled to start next week, even after the company proposed resuming salary negotiations, which caused the shares to fall by up to 9.3%.
Government-mediated talks between the union and the company over pay and bonus schemes collapsed this week, raising concerns about a strike at the world’s largest memory chip maker.
The union on Friday said it was willing to hold further negotiations after June 7, while maintaining plans for an 18-day strike starting May 21 that could disrupt production at the chipmaker.
Samsung executives called on the union to resume negotiations and apologized to the public and the government for the discord caused by the labor dispute, promising to approach the negotiations with an open attitude and continue efforts to reach an agreement.
The company said the executives were heading to the company’s campus in Pyeongtaek to meet with the union leader.
Analysts attributed the stock’s decline to growing uncertainty about the potential impact of a production strike and concerns about Samsung’s ability to meet its commitments to customers.
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“There appear to be growing concerns about delivery reliability if the strike occurs and the feeling that rivals could benefit from the uncertainty,” said Ryu Young-ho, senior analyst at NH Investment & Securities.
The prospect of a strike appears to be rising as the company does not appear to be presenting new proposals to the union, Ryu said.
COST OF THE STRIKE ESTIMATED AT UP TO US$20 BILLION
South Korea’s Labor Commission also called on the two sides to hold another round of government-mediated talks on Saturday in an effort to avoid a strike.
The union had said it would sit down to talk only if the company presented a detailed proposal that met the union’s demands by Friday.
Angered by what it calls a huge difference in bonus payments with rival chipmaker SK Hynix, the union has warned that more than 50,000 workers could walk off the job next week.
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South Korean government officials, including the prime minister and finance minister, have expressed concerns that a strike at Samsung should be avoided at all costs, warning that it could pose significant risks to economic growth, exports and financial markets.
South Korea’s industry minister Kim Jung-kwan said on Thursday that a strike would cause irreparable damage to the economy and that emergency mediation could be inevitable.
Under South Korean law, only the labor minister can invoke emergency arbitration powers. Labor Minister Kim Young-hoon emphasized the need for dialogue between the company and unions.
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The Blue House, headquarters of South Korea’s presidency, said on Friday that it hopes the strike can be avoided, adding that it has not yet reached the point of resorting to emergency mediation powers.
In a report, JPMorgan said the strike’s impact on production could be greater than previously anticipated, reflecting the union’s expectation of broader worker participation.
JPMorgan estimated the impact on Samsung’s operating profit at 21 trillion won to 31 trillion won ($14.08 billion to $20.79 billion), while sales losses could be around 4.5 trillion won.
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Shares of Samsung Electronics closed down 8.6%, compared with a 6.1% decline in the benchmark KOSPI index.
