After strike: Volkswagen demands change of Mexican labor laws

Johannes Schneider Johannes.Schneider at
Thu Sep 6 02:22:14 MDT 2001

>From today's (Sep. 6) Frankfurter Allgemeine Zeitung ( ):

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.

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