Samsung labor strikes unlikely to dent finances ‘in an age of apathy,’ experts say

Although the walkout represents the biggest organized labor action in the tech giant’s half-century history, the company maintains that its production has not yet been disrupted. This development follows a similar demonstration in June and comes on the heels of optimistic second-quarter earnings projecting a 1400% year-over-year profit increase.

But just how greatly will the walkout impact the company’s revenue, investor relations and consumer sentiment?

Economic impact: A blip on the radar

By and large, the initial economic fallout of the strikes appears mininal. While Samsung’s stocks dropped 2% at the time of the announcement, the stock spiked on Monday and, by the time markets in Seoul closed yesterday, was up nearly 7% on the week.

The news comes after a very successful first quarter for the company, in which revenue increased nearly 13% from the same period last year and operating profits jumped by a whopping 932.8% on the tailwinds of growing AI optimism.

Some experts believe the company will continue to fare well with consumers. The perception of poor working conditions and low wages rarely impacts consumer loyalty, as evidenced by other corporate giants whose businesses remains unshaken after facing their own labor disputes over the years, says Alan Price, an employment law expert and CEO of human resources firm, BrightHR.

“We need look no further than similar controversies surrounding giants like Apple and Amazon, which still continue to enjoy strong consumer loyalty and market performance,“ Price says. “While nobody can predict the future, if the past is anything to go by, this situation will be no different.”

Ultimately, Price says, “We live in an age of apathy – many consumers value product quality, price and convenience over ethical considerations.”

Consumer behavior & market resilience

Other experts agree that Samsung’s public reputation – and its bottom line – are unlikely to be significantly damaged by the strikes. Jason Voiovich, a consumer behavior analyst and marketing historian, for example, points to strikes at Starbucks last fall and ensuing collective bargaining efforts. “Not only is [Starbucks] unharmed [by these events], but there is no evidence that it will impact revenue or stock price,” he adds.

Samsung may face lower revenue expectations if the strike continues through the summer and the company’s shipping and logistics operations are disrupted in the lead-up to the US holiday shopping season, Voiovich predicts. However, in the long-term, he says, Samsung is “unlikely to face any lasting reputational impact from consumers.”

Morever, Voiovich projects Samsung will continue to attract top talent, as other tech companies like Google and Meta have succeeded in doing so despite “challenging worker reputations.”

Historical context & company response

Marcus Collins, a marketing professor at the University of Michigan, tends to agree with Price and Voivich, and assumes that consumers will continue to buy Samsung products in the wake of these actions.

“Caring for humanity and putting people first” are not the ”mental associations that people attribute to the brand,” Collins says.

And because Samsung hasn’t built a brand image centered on social good, Collins suggests, “any reputation erosion [caused by the strikes] will be less consequential than it would be for a brand that espouses a commitment to ‘people over profits.’”

And it’s not the first time workers have striked at the electronics giant. The company came under fire a few years ago for not allowing unions to represent its workers until 2020 – when Samsung heir and vice-chairman Lee Jae-yong was prosecuted for market manipulation and bribery, as reported by the BBC.

Moreover, Samsung and the NSEU have been in a standoff since January of this year after the organization denied the union’s requests for improved performance-based pay and holidays. The firm reportedly offered a 5.1% pay hike that did not satisfy the union’s wishes.

In protest, the NSEU organized a one-day walkout in June, and later responded with this week’s three-day general strike.

Samsung’s next move

As research from the Bureau of Labor Statistics would suggest, strikes resolved through cooperative negotiation tend to result in agreements that satisfy both parties.

“If Samsung wants to prevent escalation of this current strike, organization leaders should start immediately by actively listening to and engaging with its employees,” says Lauren Stralo, director of public relations at advertising services firm LevLane.

“Communication isn’t simply about sending a statement to stakeholders – those negotiating on behalf on Samsung have to understand the emotion and intentions behind the strike first.”

Stralo goes on to say that this proactive and long-term approach will also “prevent future crises and strikes” at the company.

“It’s difficult not to sympathize with the workers’ requests,” says Price. “While it may not financially harm [Samsung] to simply ignore the strike, given market trends and recent labor actions in the [tech] industry, it would be a step in the right direction to share those profits with the people that made them possible in the first place.”

In navigating these challenges, he says, “Samsung has an opportunity to help define a more positive culture for the entire tech industry.”

At the time of publishing, Samsung has not responded to The Drum’s request for comment.

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