Semiconductor strikes demand policy rethink

In the summer of 2005, pilots at Asiana Airlines went on strike, stranding holiday travelers and causing widespread disruption to air cargo operations that rippled through the economy. The government ultimately stepped in after 25 days, invoking emergency arbitration powers to end the walkout. That winter, pilots at Korean Air also refused to fly, prompting another intervention just four days later. Since its introduction in 1963, the emergency arbitration system has been used only four times, with two of those cases occurring in that single year.

The disruptions in air transport prompted lawmakers the following year to revise labor law. Under the amended Act on Trade Union and Labor Relations Adjustment, air transport was designated an essential public service. Since 2008, airlines have been classified as essential service providers, allowing substitute labor during strikes and requiring minimum operating rates of 80% for international flights and 70% for domestic routes.

The reason for revisiting events from two decades ago is the recent shock surrounding a near-strike at Samsung Electronics. Despite union members earning an average annual salary of more than 100 million won, they demanded performance bonuses of 500 million to 600 million won per worker. The company found itself with limited room to maneuver as the threat of industrial action escalated. With estimates suggesting losses could reach 100 trillion won if production lines were halted, the government also voiced concern, though its policy options were limited. The potential impact was equivalent to roughly one-seventh of the national budget, dependent on decisions by about 70,000 union members.

In the end, a full shutdown of semiconductor production was avoided. But the episode reinforced perceptions within the Samsung Electronics union of how powerful strike leverage can be in the chip industry. Workers no longer need highly visible tactics such as climbing cranes or locking themselves inside ship hulls under construction. The leverage itself appears sufficient. As a result, labor actions are expected to remain a central bargaining tool. Following Samsung’s outcome, the SK hynix union is reportedly preparing to seek similar low-interest loan support worth hundreds of millions of won per worker.

Against this backdrop, cautious discussion is emerging over whether semiconductors should be designated an essential public service. The argument is that an industry so central to the national economy should not be exposed to disruption by a single interest group. Semiconductors accounted for 37% of South Korea’s total exports from January to May this year. Samsung Electronics and SK hynix together make up more than 55% of the KOSPI’s total market capitalization, underscoring the sector’s systemic weight.

At the same time, the issue is complex, as it involves restricting one of workers’ fundamental constitutional rights. Current law defines essential public services as those in which a suspension or shutdown would significantly endanger public daily life or severely harm the national economy, and where substitution is not easily possible. Existing designations include railways, aviation, water supply, electricity, gas, hospitals and telecommunications. Whether semiconductors meet the same threshold remains under debate, along with concerns over fairness and why the industry alone should be singled out.

Looking back two decades provides context. When aviation was designated an essential public service, critics argued that grounded flights would not lead to starvation or existential harm. Still, the government pushed ahead after witnessing the scale of economic disruption caused by a halt in air transport. If airline strikes can paralyze a critical function of the economic system, a semiconductor strike could drag the entire economy backward. In an economy already facing weak growth potential, such a setback would be significant. Semiconductors are increasingly viewed as part of economic security, and from that perspective, policymakers say safeguards against strikes in the public interest warrant serious consideration.