Samsung Biologics union pulls Samsung Electronics into stalled labor talks

After three rounds of post-mediation talks with management collapsed without agreement, the Samsung Biologics union turned directly to Samsung Electronics — the company's second-largest shareholder — demanding collective bargaining. The union argues that Samsung Electronics qualifies as an employer under labor law because it has exercised substantive influence over the company's personnel and compensation systems. Industry observers, however, say proving employer status will be difficult given Samsung Biologics' structure as an independent listed company and the legal standards currently in force.

Analysts say the union's unusual move reflects the limits of its bargaining leverage with management. By widening the conflict to encompass the broader Samsung group, the union can spread the blame for the breakdown and build momentum ahead of a three-week second general strike announced for Oct. 26.

According to industry sources, the Samsung Biologics Mutual Prosperity Labor Union sent a formal letter Tuesday to the chief executive of Samsung Electronics, demanding collective bargaining over working conditions related to personnel and compensation — including job classification and grade systems, pay structures and incentive criteria.

The union's legal basis is Article 2, Paragraph 2 of the Trade Union and Labor Relations Adjustment Act, which defines "employer." Under the union's reading of the provision, a party without a direct employment contract can still be obligated to bargain if it holds a position from which it can substantively and specifically control or determine workers' conditions of employment.

The union said it has found evidence that Samsung Electronics' Business Support Task Force — now known as the Business Support Office — was involved in designing the new personnel system and setting evaluation and grade criteria, which it considers core working conditions. Park Jae-sung, chairman of the Samsung Biologics Mutual Prosperity Labor Union, said the demand was directed at Samsung Electronics "in its capacity as an entity that exercises substantive control and holds decision-making authority, and is limited to the agenda of personnel and compensation." The union said it would post notice of the bargaining demand for seven days as required under the enforcement decree of the labor act, and notified Samsung Electronics that it must respond to a first bargaining session within 14 days, warning it would file a remedy petition with the labor relations commission if the company refuses.

Industry insiders have questioned whether the demand can realistically succeed. Samsung Biologics operates as a separately listed company with its own board of directors and chief executive overseeing management. In a conglomerate ownership relationship — as opposed to a direct contracting or subcontracting arrangement — proving that Samsung Electronics "substantively controlled or determined" specific working conditions beyond ordinary management consultation or the sharing of guidelines would be practically difficult, observers note.

Samsung Biologics' largest shareholder is Samsung C&T, which holds a 43.06 percent stake, while Samsung Electronics holds 31.22 percent as the second-largest shareholder. That ownership structure has led many to conclude that the union's real aim is not genuine bargaining but rather to draw on the symbolic weight of the Samsung Electronics name to force the issue into public debate.

"By that logic, unions at every other Samsung affiliate could demand bargaining with Samsung Electronics," one industry official said. "If the basis is a shareholding relationship, it is also hard to understand why the demand is directed at Samsung Electronics rather than Samsung C&T." The official added that allowing a second-largest shareholder to be compelled to bargain over an affiliate's working conditions on the basis of its equity stake could trigger industrywide chaos, with unions across large conglomerates all rushing to demand bargaining from their key shareholders.

The limits of the union's internal bargaining power are seen as the driving force behind the move. Management has offered a 6.2 percent wage increase and agreed to add 33 new provisions to the collective agreement, saying it will guarantee compensation at the top of the industry — with average annual pay of 114 million won ($83,900) — but the union has demanded a 9.5 percent base salary increase and a performance bonus equal to 15 percent of operating profit, leaving the third round of post-mediation talks without a deal. Management says the union's demands are excessive and cannot be accepted. The union counters that it made concessions by substantially revising clauses related to personnel and management rights, and accuses management of lacking the will to negotiate.

With no breakthrough in sight from direct talks alone, the prevailing view is that the union is using Samsung Electronics' likely refusal to bargain as a lever to frame management as unwilling to engage in dialogue. The calculation, observers say, is to escalate the dispute through external proceedings such as a labor commission remedy petition, while consolidating internal solidarity and building justification for the three-week strike set to begin Oct. 26.

With the two sides still at an impasse, the union has announced it will launch a second general strike for three weeks starting Oct. 26. Biopharmaceutical production is particularly vulnerable to work stoppages because of its continuous-process nature. Management estimates that the first strike — a five-day walkout in May — caused losses of approximately 150 billion won. If the union proceeds with legal action against Samsung Electronics, including a labor commission remedy petition, the intensity of the labor-management-government standoff is expected to rise further before any strike begins.