Metalworkers at one of six General Motors' plants in Brazil have gone on strike after demanding a pay rise of 9.4% above inflation and being offered 2%.
Members of the Metalworkers Union of Sao Jose dos Campos in Sao Paulo state went on strike on Tuesday after calling for 17.45% pay hikes to include inflation which is estimated at 7.2%. The union claims that GM has offered 2% plus inflation.
Brazil's central bank, which has been struggling to contain inflation, has cautioned against big pay rises. Last month, the ABC Metalworkers Union in Sao Paulo state agreed to a two-year deal to raise wages by 5% above inflation.
The negotiations come as carmakers scale back production because of high inventories and signs of cooling demand in Latin America's largest economy after a strong start in the first half of the year. Both Ford and Volkswagen have idled factories to reduce inventories while Fiat is reported to have reduced output at its plants.
Nevertheless, analysts forecast that sales in Brazil are likely to expand 4% to 3.3m this year and about 3% to 3.6m next year.