Volkswagen AG's Mexican unit reached an agreement with union leaders on Wednesday to increase workers' pay and avoid a strike. More than 11,000 union workers at Volkswagen's plant near the city of Puebla accepted a 4.2 percent pay raise, preventing a walkout scheduled for Thursday, union leader Jose Luis Rodriguez told reporters.
The Puebla plant, about two hours' drive south-east of the capital, is the only Volkswagen operation in North America and is the sole producer of the popular New Beetle car.
The new salary deal includes minor improvements in benefits, the company and union said. Workers had originally demanded a 12.5 percent raise but lowered it to 10 percent in recent days. "With this agreement, we're above average in the (Mexican) automotive industry," Rodriguez said.
VW's annual wage negotiations are among the most public in Mexico and are seen by some economists as a barometer for other labour deals around the country.
Most analysts see inflation in Mexico ending this year at under 4 percent. Last year, the Puebla plant went on strike for four days before agreeing to a 4.5 percent wage increase, plus 1.6 percent extra in benefits. In 2001, Volkswagen Mexico was on strike for 18 days before workers and management agreed a deal.