UPDATE 2-Samsung Elec, union begin eleventh-hour talks to avert huge strike, stuck on a key issue

Samsung Electronics' management and its labour union resumed talks on Wednesday with only one day to ‌go before a planned major strike that threatens the health of South Korea's economy and could disrupt the global supply of semiconductors.

Under intense pressure from the government and business groups to avert a strike, the two sides are seeking to hash out a deal ‌on bonus payments before nearly 48,000 workers walk off the job for 18 days on Thursday. While there was a narrowing ‌of differences in talks on Tuesday, government mediator Park Su-keun said late in the day that a gap on "the most important issue" had not been bridged. He did not elaborate.

Park said he had proposed a compromise plan, which is being reviewed by Samsung. Should management accept the proposal, it will be ⁠put to ​a vote by Samsung's union ⁠members as early as Wednesday. Samsung union leader Choi Seung-ho said on Tuesday that the union was steadfast in its demand that changes in Samsung's bonus schemes be ⁠formalised beyond one year.

The union has also demanded Samsung abolish a cap on bonuses that stands at 50% of annual salaries and ​allocate 15% of annual operating profit to bonuses. Samsung has proposed that memory chip workers receive one-off bonuses this year that ⁠would top those of SK Hynix employees, while the bonus cap would stay in place.

The two sides are also wrangling over the size differences in potential ⁠bonuses ​between its memory business and logic chip businesses. South Korea's government threatened at the weekend to step in and order emergency arbitration, citing the adverse impact the strike could have on the economy.

The measure, which has been rarely employed, would prevent the ⁠strike from going ahead for 30 days while the government mediates talks. Samsung accounts for almost a quarter of the country's exports. ⁠It is also the world's ⁠largest memory chip maker and production disruptions could dent global supply at a time when the AI boom has caused shortages.

Samsung shares reversed early losses and gained 1.7% in Tuesday morning trade, ‌versus a 0.3% ‌decline for the wider market.

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