Volkswagen Slovakia will hand over a 14.1% pay rise to workers at its plant in Bratislava to end a strike, media reported on June 26.

The industrial action, which launched on June 20 after months of talks, is part of a wave across the Visegrad region. Tensions have grown in labour relations over the last year or more as Central Europe faces a worsening labour shortage. The issue is particularly sharp in the vital auto sector, with industrial disputes also ongoing in Hungary and the Czech Republic.

Unions organised the walkout after 11 rounds of talks with management failed to provoke an offer close enough to their demand of a 16% hike. The action attracted the support of Prime Minister Robert Fico and other senior government officials, who insist that foreign investors must help raise salaries in the region to make them closer to those in Western Europe.

That’s a call that is now being heard across Visegrad due to the labour shortage. However, governments are criticized for not doing enough to raise innovation and added value in the economies of the region. The difficulties of sourcing skilled workers and growing cost of labour are starting to put the economic model that has run in Central Europe since the end of communism– using cheap labour and low taxes to attract FDI – under question.

Announcing the deal on the evening of June 25, the German carmaker said workers would immediately receive a 4.7% rise and a one-off payment of €500, reports the Financial Times. Another 4.7% hike will follow at the start of next year, with a further 4.1% in November 2018. Workers will return to their posts on June 26.

Up to 80% of staff at the car plant had joined the strike. The union had said VW could well afford its demand for a 16% wage hike thanks to strong recent results and the high quality of labour at the plant. Unions have been in talks with VW since last year, noting the German company’s Slovak unit recorded a record profit in 2016. Overall developments on the Slovak labour market and economy are also a factor in the demands, MOV said in April.

On top of the wage hike, the trade union is demanding higher bonuses for shift work, extra holidays, and longer rest breaks.

South Korean carmaker Kia was forced to hand a record pay hike to unions earlier this year to avert industrial action at its Slovak plant.

Fico’s support has become stronger in recent days, with Visegrad leaders having recently told Western peers at a EU summit that they must tell their companies to bring a little balance to the wildly different levels of wages earned at their plants in CEE and Western Europe.

"Profit rates of firms in Slovakia are quite high. We mustn't fear now that they'd leave. We must put people and their demands first," Fico announced during an appearance on the Sobotne dialogy political debate show on TV on June 25. 

"I'm not saying that worker salaries in Bratislava-based VW must instantly leapfrog to the level enjoyed by their German counterparts. But if we're aware that Bratislava has the top productivity, top quality and manufactures the most luxurious cars within the whole corporation, why should it have one-third of what German worker earns in the same company?" he demanded to know.