Seoul, May 13 (IANS) Samsung Electronics and its labour union failed to reach a wage agreement on Wednesday, raising concerns over a major strike later this month that could disrupt operations at the world’s largest memory chipmaker.

The breakdown came after two days of government-led mediation talks that had been viewed as a last-ditch effort to avert the strike scheduled for May 21, reports Yonhap news agency.

Union and management have remained sharply divided over performance-based bonuses tied to the company’s earnings related to artificial intelligence (AI).

The union has demanded performance bonuses equivalent to 15 percent of operating profit, along with the removal of the payout cap and the formal institutionalisation of the bonus system.

The management, meanwhile, proposed allocating 10 percent of operating profit to bonuses and offering a one-time special compensation package that it said exceeds industry standards.

“Because the differences between the labor union and management did not narrow, we requested mediation and waited for nearly 12 hours, but the proposal only worsened,” Choi Seung-ho, head of Samsung Electronics’ largest labor union, told reporters after the meeting at the National Labor Relations Commission office in the administrative city of Sejong.

Choi said some 41,000 unionised workers have expressed their intention to take part in the general strike, adding that the number could rise to more than 50,000.

“It is meaningless to wait any longer,” Choi said. “We do not plan to hold an illegal strike. We will proceed in a legitimate way.”

Choi added that the union now will focus on responding to Samsung’s court injunction.

The district court is expected to decide by May 20 whether to grant the injunction sought by Samsung to restrict the union’s planned strike.

Following the breakdown in talks, Samsung Electronics expressed regret over the suspension of the mediation process, while pledging to continue efforts to engage in dialogue.

“The post-mediation process, which the government worked hard to arrange, unfortunately collapsed after the union declared negotiations broken down,” the company said in a press release. It, however, vowed to continue making sincere efforts until the very end to prevent the worst-case outcome from materialising.

The labour dispute at Samsung Electronics, the world’s largest memory chip maker and South Korea’s most valuable company, has raised concerns that a walkout could disrupt production and upend the semiconductor supply chain, as well as hurt the broader economy overall.

Observers say that if a full-scale strike takes place, losses to the South Korean economy, which is heavily dependent on exports, could exceed 40 trillion won (US$26.8 billion).

—IANS

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