According to a South Korean outlet, Samsung and LG will lower the pay rise for employees in 2020. The decision has supposedly been made because of the effects coronavirus is expected to have on the global economy.
After all, nearly a third of the world is in lockdown right now. Experts believe that the economy will go into recession because of the pandemic.
It is worth noting that Samsung and LG are one of the biggest South Korean companies. And if they are expecting their finances to take a hit, smaller companies will probably be affected even more.
The report claims that Samsung has decided on a 2.5 percent raise in base salary. However, this percentage isn't set in stone and it will vary according to the performance evaluation of the individuals.
In 2018 and 2019, Samsung increased the pay of its employees by 3.5 percent.
As for LG, the company has apparently agreed on a 3.8 percent pay increase. Last year, the rate was 4.3 percent.
Samsung & LG are far from the only companies being impacted
The silver lining here is that at least these companies are still going to give a pay raise to employees. Looking at how things are at the moment, we are probably headed into difficult times.
According to the research firm Strategy Analytics, smartphone sales dropped 38 percent year-on-year in February. The company believes that the coronavirus is largely to be blamed for the slump in shipments.
The analytics firm further adds that we are looking at both supply-side constraints and a decrease in demand. Because of the pandemic, operations were halted in some Asian factories. On the other hand, consumers were unable or unwilling to go to retail outlets to purchase new devices.
Previously, both Samsung and LG had halted operations at their facilities in India after a request from the government. Prior to that, Samsung had also suspended production in Gumi, South Korea after some of the workers tested positive for COVID-19.
LG has also shut down a research center and a factory in South Korea after it emerged that some employees contracted the coronavirus.
Apparently, sales of the Galaxy S20 are 60 percent of the Galaxy S10's shipments during the same period. This again has been chalked down to the outbreak. But then again, the high prices of the new phones can also be blamed for lackluster sales.
During the annual shareholders' meeting, Samsung's co-CEO HS Kim said that while the coronavirus has already started to slow down South Korea, its effects on other regions are just starting to show.
Samsung has also asked employees to work from home where possible. Other tech companies are also encouraging staff to work remotely.
Tough times loom ahead
In the US and other parts of the globe, Apple, T-Mobile, Verizon, and Sprint stores have been shut down. This is part of an effort to contain the virus.
The smartphone industry had great hopes from 2020. This was going to be a turnaround year, after several quarters of slowdown. However, with people now scrambling to survive, smartphones are probably not a top priority for most consumers.