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Mexican Union’s Petition Declined Under USMCA; Volkswagen Workers Accept New Contract

American officials recently turned down a request filed under the USMCA by Mexican independent union SNITIS regarding an alleged violation of workers’ rights at BBB Industries in northern Mexico. Meanwhile, workers at Volkswagen's Pueblo plant avoided a scheduled strike, voting to approve a 9% wage increase after declining the proposal twice last month. Companies operating in Mexico must remain agile in a quickly evolving and versatile labor landscape.

The National Independent Union of Industrial and Service Workers (SNITIS) previously filled multiple cases successfully prompting the Rapid Response Labor Mechanism twice under the USMCA, alleging labor rights violations at an American-owned auto parts company  in the border city of Reynosa, BBB Industries. However, a US Trade Representative decided that the petition did not constitute a "sufficient, credible evidence of a denial of rights" in order to trigger USMCA enforcement tools. It is unclear what prevented the request from qualifying for further investigation.

Meanwhile, over 60% of a Volkswagen Pueblo plant’s workers approved a new contract adding an extra month’s salary in addition to the previous contracts’ 9% salary and 2% benefits increases. The agreement was made just before a scheduled strike on Wednesday, circumventing the imminent  production disruption. Notably, the new pay rate is set to apply retroactively to July 20 instead of August 18, the date the prior contract expired. Even though the contract will be effective for two years, pay negotiation will take place again in one year.

The agreement between Volkswagen and the Pueblo plant union marks the highest increase for a Mexican automaker in recent years. However, Susan Prieto Terrazas, the founder of SNITIS who currently serves as a Congresswoman, criticized the increase as not big enough and just “above the inflation.” In addition, she pointed out that over 10,000 workers in the same facility should be categorized as employees based on the new labor reform banning outsourcing.

Published on: September 14, 2022

Authors: Wenchao Dong

Topics: Latin America

Wenchao Dong

Director, Global Affairs, HR Policy Association

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