Eye on AsiaWill Hyundai Have Labor Peace?
Share investors welcomed an agreement by Hyundai Motor’s unionized workers to accept a wage deal, ensuring that 2009 will be the first strike-free year in 15 years for South Korea’s largest auto company. Hyundai shares hit a record high after the union said on Dec. 24 the majority of its 45,000 members voted to support a tentative deal reached between the union and management three days earlier.
The agreement is yet another achievement for Hyundai which is widely expected to report a record profit this year. Hyundai has been a hotbed for labor strikes in Korea, with its union, the country’s largest, going on strike every year except for one since it was set up in 1987. Today, investors pushed Hyundai’s stock 3.9% higher, extending year-to-date gains to a remarkable 206%.
Under the wage plan, basic salaries will remain frozen while the company will make a one-time payout of the equivalent to three months of average salary and 40 Hyundai shares to workers. Hyundai’s new union leader Lee Kyung Hoon has refrained from involving his union in labor strife linked to political issues such as a free trade deal since his election last September. Investors will certainly welcome Lee’s leadership if Hyundai can continue to avoid output disruptions due to labor disputes next year.
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