Insights

Evaluating the Samsung Electronics Strike from an ESG Perspective

ㅣ Karl Yang, Founder & Executive Director of KoSIF ㅣ

The financial squabble at Samsung Electronics is becoming an unseemly spectacle. As the Samsung union announced an 18-day general strike from May 21 to June 7 following failed negotiations over wage increases and performance bonuses, a shareholder group, the Korea Shareholder Movement Headquarters, is organizing counter-protests.

Watching the chants of over 40,000 workers filling the Pyeongtaek campus and the looming threat of a prolonged strike, people naturally focus on the arithmetic battle over "what percentage the bonus should be." However, treating this conflict as a simple wage dispute misses its true nature. The ongoing strife at Samsung Electronics is fundamentally a matter of ESG governance, questioning the very principles by which a global tier-one corporation should distribute the value added through the cooperation of labor, capital, the supply chain, and local communities.

      Samsung Electronics’ Human Capital: Expense or Asset?

The surface-level points of contention are clear. The union demands the abolition of the performance bonus cap, a transparent calculation formula, and a fair distribution linked to operating profit. Meanwhile, management shields itself by citing economic uncertainties and cost burdens. This is where the core ESG question arises: Does Samsung Electronics truly view its human capital as a core asset for creating corporate value, or merely as an expense item to be controlled?

The competitiveness of the semiconductor industry is not determined solely by advanced manufacturing equipment. Improving yield rates, competing in cutting-edge technologies like HBM (High Bandwidth Memory), managing complex supply chains, and responding to clients are all made possible on a foundation of accumulated, highly skilled human capital. When a company generates surplus profits but rewards its workers based on opaque criteria, internal trust inevitably collapses. In ESG, the "S" (Social) component is not a mere welfare campaign. It is an index that encompasses social sustainability, including worker dignity, fair compensation, and internal trust.

Conversely, the union’s demands must also be rigorously examined from an ESG perspective. If the demand to allocate a fixed percentage of operating profit exclusively to full-time employees fails to ensure fairness across the entire supply chain, it cannot escape criticism for being an "insiders' league." Samsung Electronics' profits are the collective fruit of regular employees, numerous subcontractors, materials/components/equipment suppliers, outsourced workers, and local infrastructure. If discussions on profit distribution narrow down to a mere power struggle between shareholders and full-time workers, it will be difficult to secure the future cooperation of small-and-medium enterprise (SME) suppliers and workers at the bottom of the value chain.

This is precisely where the current Samsung Electronics labor conflict reveals its flaws through an ESG lens. Executive management treats labor as a cost, the union focuses on internal interests, and shareholders worry only about dividends and stock prices. No one is systematically discussing a "fair distribution rule" that encompasses the entire value chain. What global ESG standards demand is not a simple compromise; it is the integration of human capital management, supply chain responsibility, board oversight, and compensation governance into a single strategic framework.

      The Board and Management Must Responsibly Establish Opaque Compensation Principles

The responsibility of Samsung Electronics’ board of directors and executive management is immense. A world-class corporation should have established a predictable compensation principle beforehand, rather than relying on legal actions and public authorities to suppress the situation after conflicts explode. Legal recourse is merely the last resort of conflict management, not a trust-building ESG strategy. If phrases like "human-centered management" or "win-win cooperation" in sustainability reports lose their meaning during crises, it is not ESG management—it is just greenwashing-style public relations.

Samsung Electronics must now make four critical decisions:

• First, it must explicitly and transparently disclose the calculation formulas and grounds for its performance bonus caps.
• Second, it must present a reasonable balance point among executives, employees, shareholder returns, and transaction terms with suppliers.
• Third, it must elevate distribution principles that include supply chain workers and partner companies into a core pillar of its ESG strategy.
• Fourth, the board of directors must directly oversee this issue, defining it not as a simple labor-management dispute but as a critical "human capital risk" that dictates long-term corporate value.

      Conclusion

The current strike at Samsung Electronics will serve as a definitive litmus test, exposing the true face of Korean-style ESG. If a company is genuinely committed to ESG management, it must move beyond the retrospective question of "who gets how much" after profits are generated. Instead, it must answer more fundamental questions: Through whose contributions were those profits made, and by what rules must they be shared so that the community can survive in the long term?

The destination of Samsung Electronics' labor conflict must not be a simple wage hike; it should serve as a milestone that establishes a new distributive order for our society.