German car manufacturer Volkswagen has averted a strike at its Mexican plant in the city of Puebla by agreeing to an 8.1% pay rise with the company’s union.
Volkswagen’s deal with the Independent Union of Workers of the Volkswagen Automotive Industry (Sitiavw) included both an 8.1% salary rise and a 0.5% increase to the workers’ savings fund.
The agreement was reached after nearly 7,000 unionized workers called for a strike on Friday, having initially demanded a pay increase of 15.7% on Aug. 9.
“At Volkswagen de México we are convinced that dialogue is the vehicle to reach agreements like this, which protect the purchasing power of our staff in a post-pandemic environment that continues to present challenges for the economy and the automotive industry,” said Ricardo Guerrero, the company’s vice president of human resources.
The deal comes on the back of a 9% raise agreed in 2022, which workers at the plant initially rejected. It is the latest of several such deals made across Mexico’s automotive sector over the last year, in the context of high inflation.
In March, General Motors agreed to a 10% pay raise for workers at its pickup truck factory in Guanajuato, the first double-digit salary increase in the sector for many years. Independent unions also negotiated raises of 9.4% at Audi and 9% at Nissan.
These successive pay increases reflect increased monitoring of Mexico’s labor unions since the country’s 2019 Labor Reform, which tightened protections on collective bargaining. The reform was a condition of Mexico’s entry into the United States-Mexico-Canada Trade Agreement (USMCA) free trade pact, and has also been hailed as an important advancement in Mexican labor policy.
Volkswagen is one of Mexico’s leading car manufacturers, producing 300,000 vehicles in the country in 2022. Its Puebla plant has been in operation for 55 years and is one of the company’s largest production centers.
“The willingness and openness shown by the negotiating commissions, together with the accompaniment of the officials of the Federal Center for Conciliation and Labor Registration, made it possible to conclude the process successfully,” Guerrero said.