[Edaily Reporter KIM SUNG-JIN ] SAMSUNG BIOLOGICS(207940) Following the labor union’s demand for collective bargaining with SamsungElectronics and its request to suspend the company’s capital increase schedule, the union has now warned of a second general strike, prompting a wave of criticism and concern from experts. Legal and labor-management relations experts have pointed out that the union’s pressure tactics are misguided, arguing that it is difficult to recognize SamsungElectronics as an employer and that the demand to suspend the capital increase is not legally binding. A biopharmaceutical production expert also warned that production disruptions caused by the strike could undermine the trust of global clients and give Chinese competitors an opportunity to catch up.

In particular, there is criticism that the union’s use of the amended Labor Union Act—commonly known as the “Yellow Envelope Law”—to bring SamsungElectronics into negotiations runs counter to the law’s legislative intent. Concerns have also been raised that the general strike scheduled to begin on the 26th could affect quality and supply schedules due to the nature of biopharmaceutical production, which involves handling living cells, suggesting that the labor-management conflict could undermine the industry’s competitiveness.

Experts: “It Is Difficult to Recognize SamsungElectronics as the Employer”

As the SAMSUNG BIOLOGICS union demands negotiations with SamsungElectronics, the key issue that has emerged is whether SamsungElectronics can be considered the “de facto employer” of SAMSUNG BIOLOGICS workers under the amended Labor Union Act. The “Yellow Envelope Law” stipulates that “even if not a party to the employment contract, a person who can substantively and specifically control or determine working conditions shall be deemed an employer.”

The union argues that since SamsungElectronics has been involved in SAMSUNG BIOLOGICS’ personnel and compensation systems at the group level, it qualifies as an employer that substantially controls and determines working conditions. On the other hand, experts believe that because SAMSUNG BIOLOGICS is an independent corporation with its own personnel organization and decision-making system, it is difficult to recognize SamsungElectronics as the employer based solely on inter-affiliate guidelines or consultations.

Kim Hee-sung, a professor at the Kangwon National University School of Law, explained, “It is difficult to view SamsungElectronics as substantially controlling or determining the working conditions of SAMSUNG BIOLOGICS employees,” adding, “While it may provide guidelines or directives regarding personnel and compensation that are commonly applied to affiliates at the group level, it does not directly determine specific working conditions, such as individual employees’ wages or occupational safety.”

He added, “Providing a single set of guidelines for matters common across the group is a different issue from directly and substantively determining workers’ wages or occupational safety.” Professor Kim particularly criticized the move, stating, “The ‘Yellow Envelope Law’ was enacted to protect subcontracted workers who work in poorer conditions than those at the prime contractor; for a large corporation’s labor union to utilize this law is, in effect, the same as calling for the abolition of the Yellow Envelope Law.”

The business community expressed a similar stance. Hwang Yong-yeon, head of the Labor Policy Division at the Korea Employers Federation, said, “The business community’s position is that to be recognized as an employer, one must possess specific decision-making authority,” adding, “SamsungElectronics is the second-largest shareholder, not even the largest, and in a sense, it can be viewed as a business partner; it does not seem possible to recognize a business partner as an employer.”

The union is escalating its response, having requested on the 7th that the Financial Supervisory Service and the Korea Exchange suspend and reconsider the company’s schedule for the 3 trillion won rights offering. The union is now taking issue with the company’s plan to raise funds to secure future growth momentum. In response, Kwon Jae-yeol, a professor at Kyung Hee University Law School, said, “Since a rights offering requires a board resolution, these statements are not legally binding.”

Labor and management at SAMSUNG BIOLOGICS have been negotiating for over half a year since late last year regarding wage increases and personnel systems, but they have yet to reach an agreement. The union is demanding a 9.5% increase in base pay, but management has expressed reluctance, leading to deepening tensions. To ramp up pressure, the union plans to launch a second general strike for three weeks starting on the 26th of this month.

Biopharmaceutical Production Is “All or Nothing”… A Strike Could Allow China to Catch Up

Some observers have pointed out that if the union’s strike goes ahead, production disruptions at SAMSUNG BIOLOGICS could lead to a loss of trust among its clients. This is because biopharmaceuticals utilize living cells, making it difficult to halt the process once it has begun.

Kang Seung-hoon, a professor in the Department of Biopharmaceutical Engineering at Inha University, said, “Biopharmaceutical processes must go through a series of steps in sequence to produce a single product,” adding, “Since the products are made from living cells, stopping the process midway can cause the cells to die or become damaged, which may prevent the production of high-quality products.”

This is precisely why SAMSUNG BIOLOGICS operates its production facilities on a round-the-clock shift system. Since cells continue to grow and produce proteins even during non-production hours, continuous process monitoring is essential.

Above all, it has been pointed out that a loss of trust with clients could become a long-term burden. From the perspective of global pharmaceutical companies selecting a CDMO partner, the key factor is the assurance of a stable supply of products meeting specified quality standards at the promised time. The companies SAMSUNG BIOLOGICS does business with are primarily major pharmaceutical firms leading the global market, such as Roche, Bristol-Myers Squibb (BMS), Novo Nordisk, and Eli Lilly.

Professor Lee explained, “The most important factor is trust,” adding, “Failure to meet the quality standards and delivery schedules desired by clients could become a consideration when negotiating future contracts.”

In particular, there is significant concern that, given the rapid growth of Chinese CDMO companies, any missteps could provide competitors with an opportunity to catch up. Professor Lee pointed out, “Although China is a latecomer, it is emerging as a strong competitor, and it does not face labor union risks such as strikes,” adding, “If Samsung loses the trust of its clients due to internal issues, we cannot rule out the possibility that big pharma companies might choose Chinese firms instead.”