BUDAPEST Daimler AG's (DAIGn.DE) Mercedes-Benz cars division has reached a deal with unions at its Hungarian plant that will see base salaries increase by 10 percent in each of the next two years, it said on Monday.
The production and export of cars by foreign automakers is a key driver of economic growth in Hungary, where wages for skilled workers are well below Western European levels. The car sector accounted for more than a quarter of total industrial output in the eastern European Union member last year.
Daimler's deal follows months of negotiations at the 1 billion euro (£838.56 million) factory in Kecskemet, central Hungary, which employs about 4,000 workers, according to its latest annual report.
Vasas, a major union which had sought a 15 percent wage hike, held a two-hour strike at the plant late last month, delaying the shipment of 50 cars.
Mercedes, which makes the B Class as well as CLA and CLA Shooting Brake models in Hungary, will lift salaries by 10 percent for all workers from April and by another 10 percent from April 2018, it said in a statement.
In July, Daimler, one of Hungary's biggest manufacturers, said it would build a new factory in Hungary to make Mercedes-Benz cars, spending another 1 billion euros by 2020 and adding around 2,500 new jobs.
Daimler's two-year accord is the first publicly announced wage deal by a major private sector employer in Hungary since Prime Minister Viktor Orban's government agreed with employers on big hikes in the minimum wage last month.
Orban, who faces an election in early 2018, agreed with employers that the minimum wage would increase by 15 percent in 2017 and another 8 percent in 2018, while payroll tax will be cut by 7 percentage points in the next two years.
Corporate tax will also be lowered to 9 percent next year from 19 percent for all companies regardless of income.
Gross average wages in Hungary rose by 6.7 percent in January-September to 257,900 forints (£689) per month, based on official statistics.
(Reporting Krisztina Than and Gergely Szakacs; Editing by Mark Potter)