Daimler to increase wages by 20 percent at Hungary plant in next two years

Daimler‘s Mercedes-Benz vehicles department has reached a deal with unions operating at its Hungarian plant that will see base pay boost by 10 percent in each of the next 2 years, it stated on Monday.

The production and export of vehicles by foreign car manufacturers is a crucial driver of financial growth in Hungary, where salaries for skilled workers are well below Western European levels. The cars department represented over a quarter of overall commercial output in the eastern European Union member in 2015.

Daimler’s deal follows months of settlements at the 1 billion euro factory located in Kecskemet, main Hungary, which uses about 4,000 workers.

Vasas, a significant union which had looked for a 15 percent wage hike, held a two-hour strike at the plant late last month, delaying the delivery of 50 cars.

Mercedes, which develops the B Class in addition to CLA and CLA Shooting Brake designs in Hungary, will raise wages by 10 percent for all employees from April and by another 10 percent from April 2018.

In July, Daimler, among Hungary’s most significant makers, stated it would build a new factory in Hungary to make Mercedes-Benz cars, spending another 1 billion euros by 2020 and having 2,500 new jobs.

Daimler’s two-year accord is the first publicly revealed wage deal by a significant economic sector employer in Hungary since Prime Minister Viktor Orban’s government agreed with companies on huge hikes in the base pay last month.