Samsung Group, South Korea’s most powerful family-run conglomerate and a driving force behind the nation’s rapid economic growth, has been a global symbol of pride for many Koreans with its brand name recognized almost everywhere in the world.

According to a survey by job portal Saramin, its flagship Samsung Electronics was the most-favored company among Korean job seekers for seven years straight until last year.

This year’s U.S. corporate reputation index by Harris Poll placed the world’s biggest smartphone manufacturer in seventh place among 100 multinational companies, showing its amicable image on the world stage.

But behind the glamour, Samsung group -- with 59 affiliates ranging from tech and construction to fashion -- has been criticized for what civic groups see as undemocratic corporate structure, suppression of labor rights and its owner’s monopoly of power.

The long-running controversy over its anti-union policy and alleged dangerous working conditions for its subcontracted workers in particular has undermined its brand power at home.

Samsung’s ‘no-union’ policy

In 2011, four workers for Samsung Everland -- then-Samsung Group’s de-facto holding company and now a part of Samsung C&T through a merger -- set up a legally approved trade union at the family-owned conglomerate for the first time in the company’s history.

A week later, Cho Jang-hee, who worked for the amusement park company for 16 years and led the move to establish the union, was fired. The company accused him of professional negligence for leaking company information, but the court later ruled that the dismissal was not justifiable.

“The consequences I faced -- including a year-long trial, lay-off and financial difficulties -- for challenging Samsung Group’s no-union corporate policy sent a warning to other workers not to join a labor union,” said the vice chairman of the labor union. According to labor law, dismissed employees can remain members of the union.

Cho is no longer employed by Samsung Group, but continues to fight against Samsung’s crackdown on union activities along with five other union members working at Everland. The union is open to workers from all of Samsung’s units.

“Samsung Everland set up 150 additional CCTV cameras, presumably to oversee union members, changed our workplaces and slashed salaries, making it difficult for us to continue our labor activities,” he claimed. “It is a laborer’s right to set up labor unions under the Constitution and it is illegal that a company interferes with that.”

After several attempts to set up a union at Samsung affiliates were foiled, there are currently two -- one belonging to Samsung Everland and another on a larger bigger scale comprising of some 1,300 out of the 7,000 subcontracted workers under Samsung Electronic Service.

Samsung Group maintains that its workers choose not to join labor unions because they don’t feel the need for a union.

“We have some unions at some affiliates, but the mediation committees between the management and the workers at Samsung Group and its affiliates already serve as a communication channel,” an official from Samsung Group said, wishing not to be named.

But questions had been consistently raised over Samsung Group’s stance on unions, such as when Rep. Shim Sang-jeong of the minor left-wing Justice Party revealed a 150-page document in 2013.

The materials outlined the management’s detailed tactics regarding labor unions, including the shadowing of those involved in the union, collecting personal information about them and setting up a “company-friendly” union when workers move to establish a trade union.

Samsung Group had initially admitted that it had created such a document for high-ranking officials to discuss “desirable” company culture, but later denied it. The high court ruled in 2015 that the document had, in fact, been written by the group.

Before the document was made public, former employees including Cho have claimed that the company gave “anti-trade union” education to the workers, explaining how labor unions can take a toll on the company’s sound operation.

“Samsung Group looks smart and modernized from the outside, but it is still ruled by a single family, with all the decisions related to its affiliates made by the family in a top-down corporate structure,” said Cho Dae-hwan, director of Samsung Labor Watch, citing the company’s decision to sell four chemical and defense units to Hanwha Group in 2014.

“Employees, who lost their jobs at Samsung overnight, told me that they had learned about the news on TV,” he said. “Without labor unions, workers cannot represent their interests and communicate with the company.”

Legal battle against Samsung

Last year, Samsung Electronics announced that it had reached an agreement over its compensation plan with its workers who had contracted leukemia, cancer and other diseases while working at Samsung’s memory chip plants.

With no exact figures available, Banolim, an advocacy group representing victims of the alleged workplace illness, claims that there are 223 victims of diseases that appear related to hazardous conditions at Samsung’s factories. Among them, 76 died as of July.

Kwon Oh-hyun, a chief executive of Samsung Electronics, issued an official apology for mishandling the leukemia issue in 2014 and promised financial compensation. But the tech giant has denied a link between the diseases and its working environment at semiconductor production lines, citing lack of evidence.

The court has so far confirmed nine of the cases as work-related accidents.

Last year, the arbitrating committee, approved by both sides, recommended that Samsung compensate the victims through an independent body. But the company has since laid out plans to directly distribute funds to the victims.

Samsung Electronics said that the company had completed providing funds to about 110 out of 150 who applied for the Samsung-led compensation scheme. It did not disclose the contract papers, citing privacy reasons.

But some of the victims are refusing to accept the compensation, demanding reparations through an independent body and an apology that acknowledges the company’s responsibility for alleged lax safety management. The victims have staged a sit-in in front of Samsung Group headquarters in southern Seoul for nearly 10 months.

“Samsung ignored the outcome of the mediation committee for the company and victims and pushed for a unilateral compensation scheme,” said Lim Ja-woon, a lawyer representing victims. “I think the company was not happy about the mediation committee’s recommendation to compensate workers through an independent third body.”

The lawyer claimed that the company had pushed the applicants to accept the amount of compensation calculated by the company’s standards without giving them detailed information.

While the victims continue their accusations and are collecting relevant data, the company has not revealed related information citing trade secrecy.

More recently, the conglomerate’s mobile phone parts’ suppliers were also mired in safety controversy concerning workers from outsourced subcontracted firms.

Since late January, four workers belonging to third-level and fourth-level subcontracted firms producing mobile phone parts for Samsung Electronics have allegedly suffered loss of vision and brain damage due to methanol poisoning. The use of ethanol is recommended over methanol for safety reasons, but ethanol costs three times more.

Samsung Electronics have explained that they are primarily responsible for safety management at first-level subcontracted firms.

“We monitor safety conditions at first-level subcontracted firms that we directly make contracts with and demand them to manage the safety of workers and chemical substances at their subcontractors,” an official from Samsung Electronics said.

Civic groups have sent an open letter to Samsung Group, asking whether it was aware of the use of methanol by its subcontractors.

“In the multilevel supply chain, the main contractors also share responsibility for workers’ safety because they pressure subcontractors to cut costs and quicken production,” said Park Hye-young, labor attorney for Solidarity for Workers’ Health. “Samsung Electronics should make it clear that it cannot work with subcontractors using methanol, for example.”

“And the government has no information at all about how many were affected by the use of cheap toxic chemicals at phone manufacturers’ factories.” 

By Ock Hyun-ju (laeticia.ock@heraldcorp.com)