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Union must recognize there is no free strike

Published: 05 May. 2026, 00:02

Cho Joon-mo

The author is a professor of economics at Sungkyunkwan University and a member of Reset Korea's Employment and Labor Committee.

The right of workers to take collective action is an essential mechanism for protecting their interests and maintaining a balance of power between labor and management. Yet like all rights, strikes come with social costs. Labor economics suggests that newly-formed unions tend to underestimate these costs. This reflects the “bandwagon effect,” in which individuals join collective action less from careful calculation of wage losses than from group pressure.

Members of Samsung Electronics-affiliated labor unions call on the company to scrap a longstanding cap on bonuses during a massive rally inside the company's campus in Pyeongtaek, Gyeonggi, on April 23. [JOINT PRESS CORPS]

In practice, strike participation usually involves around 30 percent of the work force. It is common in early-stage unions to see increased leave requests on the eve of a strike and pressure on those who do not participate. These patterns highlight the tension between collective sentiment and individual judgment.

There is no cost-free strike. Wage losses and reduced performance bonuses ultimately fall on participants. In organizations with more than 100,000 highly-paid employees, a sudden rise in unionization without broad public understanding of the reasons for striking can quickly lead to fatigue. Behavioral economics shows that people respond more strongly to immediate rewards than to long-term benefits. Nobel laureate Daniel Kahneman explains in “Thinking, Fast and Slow” (2011) that individuals are more sensitive to intuition and present incentives than to deliberation and future gains.

Companies that have experienced repeated strikes tend to avoid them later because both labor and management understand the disruption involved. Such caution stems from painful past experiences.

Semiconductor plants are complex systems in which chemical supplies, electricity and centralized controls must operate simultaneously. Even brief disruptions can cause losses worth tens of billions of won. An 18-day strike could result in production losses of about 18 trillion won ($12.3 billion), with ripple effects pushing total losses toward 30 trillion won.

Some experts argue that if immediate bonus demands outweigh incentives for collaboration, bonus systems may need redesigning to better reflect contributions by key technical personnel. However, agreeing to distribute 15 percent of operating profits over the long term could create a heavy labor cost burden and complicate efforts to secure top talent.

The semiconductor industry requires massive investment, with a single production line costing more than 50 trillion won. Meeting union demands for bonuses could reach 40 trillion won, a sum that could determine whether new facilities are built. It also exceeds annual research and development spending. Losing a production line would reduce job opportunities, while cuts to research would weaken future competitiveness.

If a system similar to that of SK hynix — linking bonuses to a fixed share of operating profit and removing salary caps — is adopted, a downturn in the semiconductor cycle could raise questions about sustaining such payments.

A 40 trillion won bonus pool amounts to five to six times that of typical resources for dividends. This is not simply a wage issue but one affecting the company’s financial structure. It could lead to disputes over fiduciary responsibility or class-action lawsuits over whether bonuses count as average wages.

Lee Jae-yong, chairman of Samsung Electronics, center, inspects the cleanroom facilities at the NRD-K, an advanced integrated semiconductor research and development center, at the company’s Giheung campus on Dec. 22, 2025. [SAMSUNG ELECTRONICS]

As debate over bonus funding intensifies, some shareholders argue that strikes are no longer just a labor-management issue but one affecting all stakeholders. Some have even organized counterprotests.

The semiconductor industry’s achievements are not solely the result of corporate effort. They reflect accumulated investments, supported by government tax incentives, policy financing and infrastructure. The question is not only who receives current gains but what is preserved for the future.

Excessive distribution risks weakening investment capacity and shifting burdens to the next generation. As Warren Buffett observed, “Someone is sitting in the shade today because someone planted a tree a long time ago.” In an industry central to the national economy, strikes should remain a last resort. While the right to strike is legitimate, choices that reduce investment and competitiveness carry broader social responsibility.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.