Volkswagen Workers in Mexico Reject Union-Backed 9% Wage Hike

Volkswagen AG workers in Mexico narrowly rejected a deal struck with their own union that would have given them a 9% wage increase and 2% boost in benefits, leading the carmaker to warn that “all sides are being hurt” by this outcome.

The workers at a plant in the central state of Puebla voted 3,450 to 3,225 against the deal reached between the carmaker and their union, the Mexican government said Thursday. Annual inflation reached 8.6% in early August, the highest in over two decades.

Workers were required to vote on their own union’s deal on Wednesday as part of a landmark 2019 labor reform promoted by both Mexican President Andres Manuel Lopez Obrador and the North American free trade agreement known as USMCA. Those legal changes have transformed the way workers negotiate with companies, which for decades struck deals with unions behind employees’ backs, keeping wages suppressed. 

Under the reform, General Motors Co. workers voted out their old union earlier this year and negotiated with a new syndicate to receive a salary increase of 8.5% at their giant truck factory in central Mexico. 

Volkswagen, whose proposal was higher than GM’s, said it was “deeply disappointed,” that outsiders “influenced” the voting process using “false arguments” and that the result “is hurting a relationship built over more than 50 years.”

Mexico’s labor authorities said the union and VW can decide to extend negotiations to attempt to reach a new agreement. Otherwise workers are scheduled to go on strike Sept 9.