Volkswagen agrees to 5.5pc salary hike

German carmaker Volkswagen AG has agreed to a 5.5 per cent salary increase for workers in Mexico and another raise for next year, the company's Mexican union said, averting a potential strike, reports Reuters.

The deal comprises the wage rise plus a 1.0 per cent increase in the workers' savings fund and the indexation of food allowance vouchers, the independent union of Volkswagen workers (SITIAVW) said in a statement published on Twitter.

Labour and employers' representatives also agreed on a raise equivalent to inflation plus 2.0 per cent scheduled for 2019, it added.

That would be split between a 1.0 per cent salary hike and 1.0 per cent for the savings fund and food vouchers, the union said.

The deal for workers of Europe's biggest carmaker was reached after two weeks of negotiations, the SITIAVW said.

Volkswagen's operations in Mexico are based in the central city of Puebla, where it has one of its biggest plants.