Pay Deal Sends VW Mexico Back To Work
By Christian Geinitz
MEXICO CITY. Workers at Volkswagen's largest Mexican plant in Puebla Wednesday ended their 15-day strike after agreeing to a pay rise in cash and other benefits with a nominal cash value of 14 percent, well above the 10.2 percent the company said it was willing to pay.
Worker representatives went to the last round of negotiations demanding 16 percent in higher wages and benefits. Last year, the unions pushed through an 18-percent hike to workers' pay packages.
The plant's 12,300 workers will receive a nominal 10.2-percent pay rise, which adds up to more than 4 percent in real terms based on an expected inflation rate of 6 percent this year. The wage increase will be paid retroactively from Aug. 18, 2001.
The other benefits, known as Prestaciones, include DM58 per month more in food certificates and a one-time payment for school material, which adds another 4 percent to the tab.
In Mexico, Prestaciones are a vital part of any pay package, often making up half of a worker's overall remuneration. Before the pay rise, workers' wages were DM54 per day, compared to Prestaciones of DM 31. Volkswagen de Puebla, which is 120 kilometers east of Mexico City, says it pays the highest wages and Prestaciones in the Mexican car industry.
Recent wage agreements of General Motors, Ford and other competitors where workers walked away with up to 15-percent wage increases put the Puebla location in a difficult negotiating position.
Since the peso crisis of 1994/95, VW Mexico's wage increases have always exceeded the inflation rate. From 1994 to 2000, the accumulated wage increases were 24 percentage points above the inflation rate.
VW Mexico refused to put a figure on the shortfalls caused by the three-week strike. But one the eve of the strike, it said that the plant manufactures $25 million worth of cars per day, which would add up to $375 million for 15 days. The company agreed to pay workers for half of this time.
The company said it would take several days before it could estimate how long it would take to make up for these losses. In Puebla, 22,500 Jettas, new Beetles, Golf cabriolets and old Beetles were not produced because of the strike.
Company management said it was worried about the future of the Puebla plant. This was the second year in a row of strikes, which put a dent in the location's image, it said. The president of VW Mexico, Bernd Leissner, said in an interview with the Frankfurter Allgemeine Zeitung, that the strike could have an negative effect on the parent company's investment decisions.
"The strike and the related labor-market framework show that the Mexican government must get started with the planned reform of the country's labor law," Mr. Leissner said. In a press release, the Mexican company called on the staff and the management to make a joint effort to maintain VW's location in Mexico after the strike.