Samsung has announced that it will freeze its employees' paychecks for 2015 as it struggles to rise from the slump in its smartphone division. A Samsung official told YonhapNews that the Korean electronics giant is trying to fix this year's salaries, however the overall performance incentives, which are based on profits, won't be affected.
This is the first time since 2009 that Samsung had to freeze salaries for all of its employees. A spokesman from Samsung said. “It is true that the management and employees have reached an agreement on fixing wages,” while another corporate source explained that the decision to freeze paychecks was due to slowdown of the Chinese economy and weaker Japanese Yen. Samsung had announced two months ago that it froze payments for around 2,000 executive-level staff members through 2015.
Samsung smartphone business has been under a lot of pressure from Chinese smartphone makers in the low-end market segment, and from the likes of Apple in the high-end smartphone market. To maximise profits, Samsung started utilizing various cost-effective measurements starting 2014, which includes directing executives to travel in economy class for flights under 10 hours, encouraging employees to use vacation time, and relocating some employees in various departments.
Samsung posted a net profit of 23.4 trillion won (US$21.2) in 2014, which was a sharp fall of 23.2 percent from 30.5 trillion won during 2013. Samsung relies heavily on its smartphone business for profits, but it plunged 64 percent to just 1.96 trillion won in Q4 2014.
