GM, new union strike deal for raises at central 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 reached a deal for a new workers' contract that includes raises and benefits above inflation, the union said on Wednesday.

The negotiations at GM's plant in the central city of Silao in Guanajuato state marked a high-profile test case for a new 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 for workers to strike.

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

SINTTIA did not provide further details about the above-inflation wage deal. Mexican headline inflation rose 7.68% in the year through April to its highest levels since January 2001.

GM did not immediately reply to a request for comment.

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

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.

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%.