SEOUL (Reuters) – Samsung Electronics <005930.KS> will freeze wages in 2015 for employees in South Korea for the first time in six years, after the world’s biggest smartphone maker saw profits fall in the face of rising competition.
The cost-cutting move is the latest by Samsung Electronics, which in January reported its first annual profit decline since 2011, as it lost market share to Apple Inc’s <AAPL.O> new iPhones and cheaper Chinese rivals like Xiaomi Inc [XTC.UL].
The wage freeze also comes as the electronics giant is widely expected to unveil its next Galaxy S smartphone at a March 1 event, hoping to revive sales growth momentum.
Samsung Electronics had already frozen 2015 wages for executives as part of belt-tightening measures, a company spokeswoman said, confirming media reports.
“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.
Samsung Electronics has 93,928 employees in South Korea as of 2013.
Robert Yi, Samsung’s head of investor relations, signaled earlier this month that the firm may cut dividends in 2015 after it hiked its payout by 40 percent and bought back stocks last year.
Samsung Electronics shares ended down 0.3 percent while the wider market <.KS11> was up 0.1 percent as of 0613 GMT (0113 ET).
news source & image credits: sg.news.yahoo.com