South Korea’s largest automaker has seen its shares slump to a new low this past weeks, as the company announced a huge $10 billion deal to buy a prized land lot in Seoul and the workers started a partial strike in retaliation.
Now, Hyundai’s shares climbed the most over the past two weeks as the company announced it reached a preliminary agreement with the labor unions, easing concerns that strikes might lower production output.
“The deal helps get rid of concerns that the strikes may go on for long enough to hurt fourth-quarter profits, so it’s definitely good news,” comments Lee Sang Hyun, an analyst at NH Investment & Securities. “Still, the lost production so far will have a negative impact on this quarter’s results.”
Following the country’s Supreme Court ruling last December that periodic bonuses and other compensation need to be contained inside the employee’s base wage, the unions and management clashed on the matter – with both Hyundai and Kia sued on the issue.
The workers union and the Seoul-based carmaker now have a deal in place that has among others the workers base pay raised by 98,000 won ($93) and there’s also a one-time payout of 8.9 million won. The workers still need to vote on the deal tomorrow for the arrangement to be final, according to the company.