June 20, 2017 / 9:07 AM / 8 months ago

VW's Slovak workers strike over pay, denting production

BRATISLAVA, June 20 (Reuters) - Workers at Volkswagen’s Slovak plants went on strike on Tuesday over demands for a bigger wage rise, hitting a key part of the central European country’s manufacturing output.

About 70 percent 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 declined to comment on the impact of the first-ever strike at a major Slovak plant, which comes as economies across central Europe outpace western Europe, leading to a labour shortage that many companies worry limits growth.

On Monday, Slovak Prime Minister Robert Fico supported the unlimited strike action by the VW workers, which began as labour office data on Tuesday showed Slovakia’s unemployment rate fell to 7.4 percent 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 heftier pay hike would endanger the plant’s competitiveness within the car group and also job stability.

The VW workers are seeking a 16 percent pay hike and have refused management’s offer of a 4.5 percent raise this year and 4.2 percent 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 percent this year and above 4 percent in the coming years, with the car sector the most important driver. Slovakia, with a population of 5.4 million, makes more than a 1 million vehicles a year and is the biggest per capita producer in the world.

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

Peugeot and Kia have raised wages at their Slovak plants by 6.3 percent and 7.5 percent, respectively. ($1 = 0.8963 euros) ($1 = 23.4600 Czech crowns) (Editing by Jason Hovet and Alexander Smith)

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