Samsung struggles to break labor deadlock, while Celltrion prepares for first union
Korea’s leading biopharmaceutical firms — Samsung Biologics and Celltrion — have found themselves in unfamiliar territory, facing disputes with their labor unions amid upbeat earnings.
The standoff between Samsung Biologics and its labor union, which began in April, appears likely to continue for some time, as the two sides struggle to find common ground.
Samsung Biologics' labor union is weighing whether it should withdraw itself from Samsung Group’s conglomeratewide labor union after a Samsung Electronics labor union struck an eleventh-hour agreement with the company to avert a full-scale walkout last month.
Samsung Biologics' labor union said it was not easy to act in Union with the conglomeratewide union because each firm’s stakes were different, adding that the direction of the strike would not change much even if it pulls out of the larger labor union.
The Samsung Biologics labor union plans to hold a general assembly next week to discuss its plans, and put the withdrawal to a members vote during the last week of June.
Industry stakeholders expect that the withdrawal from Samsung’s groupwide union is likely to boost the biopharmaceutical union’s negotiation power as it will be able to act on its own.
While the two sides have failed to come up with an agreement, the union already conducted a full-scale strike lasting five days, from May 1 to 5. The first total walkout in the 15-year history of Samsung Biologics cost the firm estimated losses of 150 billion won ($98 million), which is about 25 percent of the firm’s operating profit in the first quarter of this year. The union has been in a work-to-rule mode since then.
As the nature of the firm’s contract development and manufacturing organization requires nonstop processing of biopharmaceuticals, the company and union are battling it out in court. The latter sought a court injunction to restrict certain activities from being part of the strike.
Samsung Biologics' share price has fallen more than 10 percent since the walkout in early May.
“In the short term, there are labor union’s strike risks,” said Shin Ji-hoon, an analyst at KB Securities. “But if they can reach a deal, it could be resolve uncertainties and act as an upside.”
Celltrion is bracing for negotiations with Unitrion, Celltrion’s first labor union since its founding in 2002. Unitrion was launched on June 1 under the umbrella of the Korean Confederation of Trade Unions.
“We demand transparent compensation and respect for our commitment,” said Unitrion in a statement.
“Despite the fact that Celltrion is a key pioneer in leading Korea’s biopharmaceutical industry, the only thing that came back to the workers who stayed at the production site and lit up the lab day and night was sacrifice under the name of ‘pride.’”
The union underlined four key demands: greater transparency in determining bonuses and salaries based on negotiation, more hiring, improved employee benefits and a better workplace culture.
Celltrion said it respected the right to set up the labor union within legal boundaries and will respond accordingly depending on the union’s future action, vowing to do its best responsibly manage the firm and communicate with employees to achieve stable business operation and sustainable growth.
Celltrion shares have slipped by about 12 percent since the launch of the union.
“The compensation system should be amended in steps with the growth of the Korean biopharmaceutical industry,” said an industry official.
“To prevent talent leakage and keep up the growth of the biopharmaceutical industry, establishing an adequate compensation policy will be able to strengthen this sector.”
The official, however, stressed that as the biopharmaceutical industry is directly linked with public health and has grown on trust from global clients, any extreme standoffs should be avoided, while efforts to achieve a compromise and a win-win situation are needed.
“The struggle throughout the negotiations might have something to do with that the (biopharmaceutical) industry is not as mature as some of the other industries with a longer history of labor relations such as heavy manufacturing,” he added.
By Kan Hyeong-woo (hwkan@heraldcorp.com)
