GM, new union reach deal for raises at major Mexico plant

© Reuters. FILE PHOTO: A view of the main entrance of the General Motors' pickup truck plant as workers vote to elect a new union under a labor reform that underpins a new trade deal with Canada and the United States, in Silao, Mexico February 1, 2022. REUTERS/Sergi

By Daina Beth Solomon

MEXICO CITY (Reuters) -General Motors and a new independent union at the U.S. automaker's biggest Mexico plant have struck a deal for a new workers' contract that includes raises and benefits above inflation, the union said on Wednesday.

The union, SINTTIA, did not provide further details about the wage deal. Mexican headline inflation accelerated to 7.68% in April, its highest level since January 2001.

The negotiations at GM's plant in the central city of Silao in Guanajuato state were a high-profile test case for a new North American trade deal's goal of reducing the vast wage gap between U.S. workers and their Mexican counterparts.

The agreement comes after talks began several weeks ago, and forestalls a May 31 deadline set by SINTTIA for workers to strike.

"The new collective contract improves labor conditions on all levels," SINTTIA said in a statement. "The agreed deal includes an economic package of salary increases and economic benefits that is above inflation."

GM did not address details of the agreement, but said the negotiations had concluded.

Reuters reported last month that SINTTIA initially proposed a 19.2% raise, citing rising inflation in Mexico, which GM countered with an offer of 3.5%.

A vote for workers to approve the contract will likely take place around the end of May, SINTTIA's secretary general Alejandra Morales told Reuters.

SINTTIA became the first independent union in the GM Silao plant's more than 25-year history in one of the first union elections under the new trade deal, the United States-Mexico-Canada Agreement (USMCA). [nL1N2UE0N7]

The provisions in the 2020 deal that replaced the North American Free Trade Agreement (NAFTA) were meant to help Mexican workers elect unions that will best fight for their interests, breaking the grip of business-friendly groups that operated behind workers' backs for years as cheap labor lured companies to Mexico.