Volkswagen’s Mexico unit has agreed to boost the worker pay and benefits of 5.46%, the regional union for the German automaker said on Tuesday after the company froze salaries of employees in Germany this year because of the coronavirus crisis.
Manuel Aburto, the spokesman for the Independent Union of Automotive Industry Workers (SITIAVW), said the deal for a new 2020-21 collective contract made up of a salary hike of 3.62% and an increase in “benefits” of 1.84%. He refused to specify the kind of benefits the deal applied to.
The 3.62% increase is in line with the yearly rate of inflation recorded in Mexico in July. Workers had a hard time to achieve pay increases since the coronavirus pandemic took hold in late February, damaging the economy.
Volkswagen’s union members in the central state of Puebla, Mexico, where Volkswagen operates one of the country’s largest auto plants, had sought a 12% wage boost and threatened to strike over the demands by August 18.
The plant, which as of May had 11,364 workers, including administrative and technical staff, works on making 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 coronavirus pandemic and the work situation,” Aburto stated, adding that more information would be provided.
The new deal, which came after over three weeks of negotiations, went into effect at 11 a.m. local time on Tuesday, Volkswagen Mexico stated.
Volkswagen said in April that it had agreed with German metalworkers’ union IG Metall for keeping its prior wage agreement in place until December without a pay increase.