But tentative deal receives backlash from tech giant's shareholders
South Korea's Samsung Electronics has averted the second-ever strike since its founding after a last-minute provisional deal reached by its management and unions last week, according to reports.
The general strike, initially set from 21 May to 7 June, was called off a day before the industrial action after representatives met in government-mediated negotiations last week, Yonhap News Agency reported.
"We will postpone the general strike scheduled for May 21-June 7 until further notice," said the joint headquarters of Samsung Electronics' labour union in a notice, as quoted by a news outlet.
A separate report from The Korea Herald said the provisional agreement includes a 6.2% wage increase, a new housing loan programme, and a "special semiconductor performance-based bonus."
According to the report, the bonus pool would be equivalent to 10.5% of operating profit after excluding labour costs, including provisions for the company's existing overall performance incentive.
Voting on the new offer began on Friday, local media reported.
Averted second-ever Samsung strike
If the strike went ahead, tens of thousands of employees would have walked off their jobs for 18 days, marking the second-ever strike since Samsung Electronics was founded in 1969.
Authorities in South Korea vowed to pursue all options, including an emergency arbitration order, to avoid the industrial action that Prime Minister Kim Min-seok warned could incur direct losses of as much as KRW1 trillion in just a single day.
South Korea's presidential office welcomed the suspension of the union's strike action.
"This is the result of the combined efforts of government officials, including the labour minister, who remained committed to mediation until the very end," an official from South Korea's Blue House said in a statement quoted by Yonhap.
Stirring shareholder concerns in Samsung
Meanwhile, Samsung in a statement apologised for causing concern during the mediation process, and expressed thanks to the government, employees, and the public after the tentative agreement was reached.
It also pledged to prevent similar disputes from happening in the future, vowing to establish a "constructive and mature" relationship with unions.
"We will make our utmost efforts to further contribute to the national economy by fulfilling our fundamental role and responsibilities as a company," the tech giant said in a statement quoted by Yonhap.
However, the tech giant faces a revolt from shareholders who are opposing the profit-linked bonuses in the tentative deal.
The Korea Shareholder Action Headquarters is claiming that the bonuses do not have legal validity because they were not passed in a shareholders' resolution.
The shareholders' group staged a protest against the deal last week near the residence of Samsung Electronics chairman Lee Jae-yong.
The group warned that it would launch legal action to invalidate any board resolution approving or executing the tentative deal.
It also warned that the company's directors could be accused of breaching their fiduciary duties, including their duty of loyalty and duty of care, according to a report from The Korea Herald.
The controversies following Samsung Electronics arose against the backdrop of a global AI-driven memory chip supercycle.
Samsung's latest quarterly results revealed an operating profit of KRW57.2 trillion for the period of January to March.
This is the highest profit recorded by the tech giant since its founding, roughly eight times the figure for the same period a year ago.
