Samsung Biologics is facing an escalating labor dispute. After negotiations over wages and collective agreements broke down, the union has halted the company's planned 3 trillion won capital increase and is demanding direct negotiations with Samsung Electronics, its second-largest shareholder. The union has also announced a total strike starting on the 26th of this month, raising concerns about production disruptions and damage to customer trust.
On October 7, Park Jae-sung, chairman of the Samsung Biologics union, stated, "As the union chairman and head of the employee stock ownership association, I have requested the Korea Exchange and the Financial Supervisory Service to postpone and review the schedule for the capital increase subscription."
Samsung Biologics is pursuing a capital increase of approximately 3 trillion won to acquire the peptide CDMO company Polypeptide Group. The union raised concerns that the start date for trading subscription rights on the 26th coincides with the beginning of the second strike. They argue that proceeding with the capital increase amid significant uncertainty from the labor dispute contradicts the purpose of the employee stock ownership association, which is to promote workers' asset formation. The union has also requested that financial authorities investigate a discrepancy of 335.9 billion won between the total investment amount and the funding total in the financial plan for the sixth plant.
The previous day, the union demanded collective bargaining with Samsung Electronics. They argue that Samsung Electronics, which holds a 31.22% stake in Samsung Biologics, has been significantly involved in the company's job classification, evaluation, promotion criteria, and compensation standards, thus qualifying as an 'employer' under the revised labor union law.
By identifying Samsung Electronics as a direct negotiation partner, the nature of the conflict has shifted. Previously, the issues were centered on Samsung Biologics' wage and personnel systems, but if the union's claim that Samsung Electronics is a de facto employer is accepted, the dispute could escalate to a group-level negotiation issue. How Samsung Electronics responds to the union's demands remains uncertain, as the company has not provided an official comment on the matter.
The labor negotiations between Samsung Biologics and its union have failed to reach an agreement since they began at the end of last year. The union held its first total strike in May, and subsequent mediation attempts have all failed as of October 1. Consequently, the union has announced a total strike lasting three weeks, which is more than four times the duration of the first strike.
The key issue in the labor dispute is 'wages.' The company insists on a 6.2% wage increase, while the union demands a 15% increase in base salary and a 15% performance bonus based on operating profit, which the company deems unacceptable. Although the union has proposed a revised demand lowering the base increase to 6.5%, the company has reiterated its original proposal.
Market concerns are growing over the potential impact of the strike on the competitiveness of contract development and manufacturing organization (CDMO) bids. During the strikes in April and May, production processes for 23 products, including anticancer drugs, were halted, resulting in losses of approximately 150 billion won. In biopharmaceuticals, production batches are often discarded if the process is interrupted. The second strike coincides with Samsung Biologics' participation in international events such as 'CPhI Milan' and 'World ADC,' where they are competing for contracts. Stability in production and adherence to delivery schedules are critical factors for clients when selecting production partners, heightening concerns.
John Lim, CEO, also expressed in an email to employees, "If production disruptions and process delays occur, not only will there be concerns about new orders, but there is also a high possibility of damaging long-standing trust with existing clients."
As the union escalates its response, Samsung Biologics has announced a firm stance against illegal activities. In an email sent to employees, the company stated, "We will take measures in accordance with the law and principles regarding any illegal activities that have recently occurred, while striving for resolution through dialogue, but we will respond strictly to actions that violate the law."
* This article has been translated by AI.
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