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Volkswagen’s Slovakia plant workers halt production lines over pay hike

Workers at Volkswagen Slovakia are set to strike on June 20, 2017 over unmet demands for a 16 percent pay rise from the country's largest private employer, a union official said.

autos Updated: Jun 20, 2017 17:24 IST
This file photo shows models posing in front of a new Volkswagen UP! car during an official presentation of the New Small Family vehicle production at the Volkswagen car manufacturing plant in Bratislava, Slovakia. (AFP file photo)

Volkswagen was hit by its first ever strike in Slovakia on Tuesday as workers began a walkout to demand a higher pay increase which could hurt the central European country’s manufacturing output.

About 70% of VW’s 12,300 employees at its three factory facilities joined the protest, union chief Zoroslav Smolinsky said, adding that production would be hit.

VW said the Bratislava plant halted production lines that make Volkswagen Touareg, Audi Q7, Volkswagen up!, Seat Mii, Skoda Citigo and bodies for the Porsche Cayenne. More than 99% of the plant’s output is exported.

It said VW parts and machinery factories in towns of Stupava and Martin were working normally on Tuesday.

The first strike at a major Slovak plant since the 1989 end of communist rule comes as economies across central Europe outpace western Europe, leading to a labour shortage that many companies worry will limit growth.

On Monday, Slovak Prime Minister Robert Fico supported the strike action, which began as labour office data on Tuesday showed Slovakia’s unemployment rate fell to 7.4% in May, the lowest since the global financial crisis hit central Europe in 2008.

“Why should a company making one of highest quality and most luxurious cars with a high labour productivity pay its Slovak workers half or one third of the amount it pays to the same workers in western Europe?” Fico said to reporters.

But VW’s Slovak unit said last week that union demands for a bigger pay hike would endanger the plant’s competitiveness within the car group and also job stability.

The VW workers are seeking a 16% pay hike and have refused management’s offer of a 4.5% raise this year and 4.2% raise next year, plus bonuses.

“We deserve at least a double-digit raise,” Smolinsky said.

VW produced 388,687 cars in Slovakia in 2016.

The company pays an average wage of 1,800 euros ($2,008) a month, double the national average.

That figure is also higher than the average salary of 37,000 crowns ($1,577) that VW pays at its Czech carmaker Skoda Auto.

Slovakia’s Finance Ministry has calculated 12 days of an uninterrupted strike would cut 0.1 percentage points off the country’s annual economic output.

Growth is seen at 3.3% this year and above 4% in coming years, with the auto sector the most important driver. Slovakia, with a population of 5.4 million, makes more than a 1 million vehicles a year making it the biggest per capita auto producer in the world.

Besides VW, Kia and Peugeot have plants in Slovakia and Jaguar Land Rover is building a plant due to open next year.

Peugeot and Kia have raised wages at their Slovak plants by 6.3% and 7.5%, respectively.

First Published: Jun 20, 2017 17:24 IST