KGHM unions claimed that the workforce voting in a ballot on whether to launch a protest action against the management refusal to meet unions demand for higher wages and increased contribution to the employee social fund, was valid, contradicting official company reports. Unions claimed that the ballot turnout reached 50.4% exceeding the 50% threshold, required for it to be valid, while the management claimed the turnout was 42%. Union leaders said they would press for a strike action.
Our view: We would expect a negative price impact of the news today. The scenarios include i) a prolonged legal dispute, ii) new wave of negotiations and some concessions iii) employee strike action. In our view, the options i) and ii) are still far more likely than iii). Please note, that the average pay in KGHM would rise from PLN 7700 currently by 12% y/y in 2007, as the result of previous agreements with the unions and via profit participation scheme for employees.