In an effort to cut costs amid declining profits, Samsung has announced that it will freeze its employees’ salaries in South Korean this year, The Wall Street Journal reports. The move comes as a result of the Korean tech giant posting its third straight profit decline in the quarter ended December last year, due to falling smartphone sales and prices, and rising competition from Apple’s new iPhones.
According to Reuters, the wage freeze also comes as the company is widely expected to unveil its next Galaxy S smartphone at a March 1 event, hoping to revive sales growth momentum. “Samsung had already frozen 2015 wages for executives as part of belt-tightening measures”, a company spokeswoman said while confirming media reports. The new salary freeze however won’t impact individual incentives or bonuses, she added.
“The measures are likely to inject a sense of crisis into employees, who have enjoyed steady wage increases and hefty bonuses in recent years,” said Chang Sea-Jin, a business professor at Korea Advanced Institute of Science and Technology and author of the book “Sony vs Samsung”.
A Samsung spokesman did not elaborate on the reasons for the wage freeze. The company last froze wages in 2009, in the wake of the global financial crisis.
Last year, hundreds of senior managers at Samsung’s mobile division took a 25% cut in their first-half bonuses due to the company’s poor profits.