Can Samsung Avoid Union Risk?

There are several reasons Samsung rose to become one of the world’s greatest companies. One of them is its “union-free management.” Yet in December 2019, Samsung gave up its union-free management policy. It was the first time in 81 years since its founding.

There may have been an unavoidable aspect to this, given the excessive political pressure, but many citizens and consumers who care about Samsung feel deeply troubled. They worry that political logic may run rampant in a valuable workplace, red flags may begin to wave, cooperation between investors and workers may collapse, and lives may be damaged.

Among Korea’s top 10 conglomerates, Samsung was the only one without large-scale labor-management disputes. According to Ministry of Employment and Labor statistics, an average of 100 labor-management disputes occurred each year from 2010 to 2018. But Samsung was always the exception. Because it was able to keep its distance from the labor movement, it achieved outstanding results and was able to hire talent more aggressively and offer better treatment.

Why was a union unnecessary at Samsung? Because employees were already receiving the best treatment, and separate in-house bodies were in place to address grievances. No one wants to make their workplace a hostage to political conflict, and people want to improve their jobs themselves. This sentiment among workers was well aligned with the company’s union-free management.

Google, Amazon, Apple, and Facebook—among the world’s leading companies—also do not have unions. In fact, unions are a product of premodern history. If an organization armed with the legal privilege to engage in collective action shakes management from within the company, it inevitably becomes an obstacle to becoming a top-tier firm. Unlike its competitors, Samsung must now also confront anti-business struggles by labor unions. It is thus at risk of having its energy for survival in the rapidly changing IT market dispersed.

Korean labor unions have not escaped a backward labor culture marked by struggle and violence. In particular, the Korean Confederation of Trade Unions obstructs the normal management of companies and even resorts to violence in defense of vested interests. They deliberately disrupt proceedings at shareholders’ meetings to interfere with corporate management and paralyze workplaces. They discriminate against those who are not union members, preventing them from obtaining work, while preserving the status of so-called “aristocratic unions.” They sometimes occupy worksites and incapacitate business operations.

If such militant unions take root at Samsung, Samsung’s corporate competitiveness will inevitably decline. A situation may arise in which the company must watch the union’s reaction before deciding where to invest and what products to make. For young people preparing to enter the workforce, Samsung is a “dream workplace.” If unions take control of Samsung and wield special privileges, Samsung will lose that status.

Corporate growth and workers’ working conditions are complementary. Improvement comes not through outside pressure or one-sided demands made through strikes, but through voluntary contracts and cooperation between workers and employers. Union-biased politics that forced unionization on Samsung will not be a problem for Samsung alone.

The more policies there are that serve only unions, the more companies will leave for overseas. The more capital turns away from domestic investment in search of a better environment, the more the damage will ultimately fall on our workers and citizens. One can only hope that Samsung will manage this “union risk” well.

Sung-no Choi, President, Center for Free Enterprise (CFE)

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Original title: 삼성은 노조 리스크를 피할 수 있을까?

Author: Sung-no Choi

Date: 2020-08-09

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&pn=20&idx=22990