Volkswagen’s Mexico unit has agreed an increase in worker pay and benefits of 5.46%, the local union for the German automaker (VOWG_p.DE) said on Tuesday, after the company froze worker salaries in Germany this year due to the coronavirus crisis.
Manuel Aburto, spokesman for the Independent Union of Automotive Industry Workers (SITIAVW), said the deal for a new 2020-21 collective contract comprised a salary hike of 3.62% and a rise in “benefits” of 1.84%. He declined to specify the kind of benefits the deal applied to.
The 3.62% increase is in line with the annual rate of inflation recorded in Mexico in July. Workers have struggled to achieve pay rises since the pandemic took hold in late February, battering the economy.
Volkswagen’s union members in the central state of Puebla, where Volkswagen runs one of the country’s largest auto plants, had sought a 12% wage increase and threatened to strike over the demands by Aug. 18.
The plant, which as of May had 11,364 workers, including administrative and technical staff, makes the Tiguan, Jetta and Golf models for sale in the United States, Mexico and other markets.
“It is a feat given these difficult times, including the pandemic and the work situation,” Aburto said, adding that more details would be provided.
The new deal, which came after more than three weeks of negotiations, went into effect at 11 a.m. local time on Tuesday, Volkswagen Mexico said in a statement.
Volkswagen said in April that it had agreed with German metalworkers’ union IG Metall to keep its prior wage agreement in place until December without pay rises.