Workers at a Volkswagen plant just outside Sao Paulo enter the third day of a strike over widespread job cuts in the sector. As Ciara Lee reports, it's the second strike by a major German carmaker to hit Brazil this week and a first test for newly re-elected president, Dilma Rousseff.
Workers at a Volkswagen plant outside Sao Paulo continue their indefinite strike over job cuts. It comes after the company cut 800 staff and warned of the need to further trim head count. It all adds to rising tensions in the auto sector, which produces a quarter of Brazil's industrial output. Payrolls in the industry shrank around seven percent last year as domestic vehicle sales fell by the most in 12 years, due to rising interest rates. Weak consumer confidence and the end of long-running tax breaks for the industry have also hurt. Vice President of the Global Workers' Committee, Valdir Freire says thousands of letters have been sent to employees, which he says are a prelude to contracts being terminated. (SOUNDBITE) (Portuguese) SYNDICATE DIRECTOR AND VICE PRESIDENT OF THE GLOBAL WORKERS COMMITTEE, VALDIR FREIRE, SAYING: "So, immediately, we parked the truck in front of the factory and mobilised all the workers. This is what you are seeing here, the factory at a standstill." Employees at a nearby Mercedes Benz factory also declared a strike this week, after 244 workers were cut and around 750 remained on paid leave. The labour stand-off is testing the mettle of President Dilma Rousseff's new economic team. They've promised an end to the cheap credit and tax incentives that have propped up key industries but wrecked government accounts. Auto sales fell an estimated 7.2 percent in 2014.