Samsung to freeze salaries of its South Korean employees this year

Himanshu Arora

Posts: 902   +7

Samsung has announced that this year it will freeze the salaries of all its workers in its home country of South Korea, where the company employs nearly 93,928 people. The last time the company took such a step was in 2009, in the wake of the global financial crisis.

Last month, Samsung reported its first annual profit decline since 2011, as it lost market share to rival Apple, which shipped a whopping 74.5 million iPhones in Q4, 2014. According to a report released by market research firm IDC last month, the Cupertino-based company fell just short of surpassing Samsung for the top spot in the global smartphone market last quarter.

The move comes just days before the South Korean company is scheduled to unveil its next flagship smartphone, the Galaxy S6, as well as its curved screen variant, at a March 1 event, just a day before the Mobile World Congress (MWC) 2015 in Barcelona officially kicks off.

Although Samsung did not comment on the reasons behind the move, a spokesperson did confirm that the company has already frozen 2015 salaries of its executives as part of belt-tightening measures. According to a Wall Street Journal report, the new salary freeze will not impact individual incentives or bonuses.

The news also comes just over a week after market research firm Harris Poll ranked the South Korean company as the 3rd most reputable firm in the United States, ahead of rivals Apple and Google.

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VitalyT

Posts: 5,113   +4,135
TechSpot Elite
This sounds really bad, considering that announcement of Galaxy S6 is right around the corner (MWC, March 1st). It means the product launch will be just as underwhelming as the last one, when people were upset about changes being too minor over the previous generation.

I expect we will see another 2K screen, and thus no battery life improvement whatsoever, if not getting worse. But look - I can finally see every wrinkle on my cat's a$$hole!
 
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JakeT

Posts: 74   +20
Nothing perks employee morale like a salary freeze.
Motivation is what drives quality and progress.
 

Skidmarksdeluxe

Posts: 8,645   +3,286
It's not a bad thing at all if it's just the execs salaries that get frozen, maybe it's just the motivation they need to get off their fat butts and do something for their keep.
 

dividebyzero

Posts: 4,840   +1,264
Nothing perks employee morale like a salary freeze.
Motivation is what drives quality and progress.
You are probably beginning to seeing the "real" Samsung for the first time. The Samsung group profits in the past have been bolstered by price fixing, bribery, and flexible attitude towards the licensing of other companies IP. With the company under increased public scrutiny it now has to do business on a more level playing field.
It's not a bad thing at all if it's just the execs salaries that get frozen, maybe it's just the motivation they need to get off their fat butts and do something for their keep.
It's probably quite strenuous stuffing a golf bag full of cash and lugging it around:
Moreover, a Korean lawmaker claimed that Samsung had once offered her a golf bag stuffed with cash, and a former presidential aide said the company had given him a cash gift of $5,400, which he returned.
 
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captaincranky

Posts: 16,136   +4,903
Well, they can always follow the guitar manufacturer's lead and move their production facilities to Indonesia. (Korean luthiers got pretty uppity about money a couple of years back). The upward spiral of employee wages will hit there eventually. But for now, they should be good.
 

Archean

Posts: 5,631   +91
@DBZ
Apart from these, the fact is, there is a limit to which one can sell 'imitations' of the real thing, there will always be someone waiting in the wings & willing to make an even cheaper (yet better) copycat (e.g. Xiaomi). Therefore, scope of growth has a limited short term life, then perhaps a flat-line (if they are lucky) before the decline starts ......

I think Samsung will have far better future prospects if it focuses on providing screens/SoCs/memory chips/nand flash etc. to various OEMs, instead of trying to compete with them with its inferior software layer along with "gimmicky features".

Edit:
These are some a really damning figures, especially for the "dominant mobile platform", which is not surprising.

I guess, for now it shows that life as copycats is not that easy in any way.
 
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dividebyzero

Posts: 4,840   +1,264
@DBZ
Apart from these, the fact is, there is a limit to which one can sell 'imitations' of the real thing, there will always be someone waiting in the wings & willing to make an even cheaper (yet better) copycat (e.g. Xiaomi). Therefore, scope of growth has a limited short term life, then perhaps a flat-line (if they are lucky) before the decline starts ......

I think Samsung will have far better future prospects if it focuses on providing screens/SoCs/memory chips/nand flash etc. to various OEMs, instead of trying to compete with them with its inferior software layer along with "gimmicky features".
True enough. If they can get 14nm (and 10nm) into the market at acceptable yield and ramp, they should at least maintain - and probably grow, their semicon business at the expense of TSMC. ~$28bn of the $37bn they picked up in sales is memory product driven (DRAM, NAND, eMCP, and the soon to market ePOP) which should remain steady if not increase. The $9bn they picked up in logic IC's revenue should pick up quickly once 14nm-XM proves its worth. If they beat TSMC to the punch, they'll pick up orders left and right.

Why bother playing the consumer commodity game against the white box vendors and companies willing to cut profit to the bone to trade up in market penetration, when you can supply everyone in those markets and sit back and watch the dogfight content in the knowledge that whoever wins, Samsung's making sales.
 

Skidmarksdeluxe

Posts: 8,645   +3,286
Unless I am severely mistaken, freezing salaries does not mean showing them the door.
I wouldn't have thought so but how can you freeze salaries and still expect people to work?
It's the first time I've of something like this unless it's similar to something we have here called 'short time' wherein the incumbent is officially employed by the company but is only paid when the company needs their services.
 
Salary freeze = no more increases in base pay white collar workers
wage freeze = no more increases in pay blue collar workers.

Both will still receive a paycheck just no increases until freeze is lifted. Usually it's blue collar workers that gets the freeze.
 
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Skidmarksdeluxe

Posts: 8,645   +3,286
Salary freeze = no more increases in base pay white collar workers
wage freeze = no more increases in pay blue collar workers.

Both will still receive a paycheck just no increases until freeze is lifted. Usually it's blue collar workers that gets the freeze.
Thanks. It makes sense. (y)
 

mctommy

Posts: 350   +85
Freeze happens all the time. There was a slew of companies who implemented those in 2008 and thereafter due to the economic crisis.

People will work, they just won't get $ raises.