Acceptance of the deal effectively removes the threat of closure hanging over the plants, and particularly the Luton factory. Under the new three-year arrangement, salaries will rise by 3.5% from August 3, 1998, and by 3% or the rate of inflation (whichever is higher) in the following year.
In the third year, however, pay will rise by the rate of inflation, with an extra 0.5% paid if the average exchange rate for sterling falls below Deutschmark 2.70 (the current exchange rate is just under DM3) for two consecutive months. This radical third-year proviso reflects the huge impact of the foreign exchange markets on the costs of manufacturing in different countries.
Vauxhall's white collar staff voted to accept the ground-breaking deal early last week, but it was the approval of the company's 10,000 car workers which was critical to its success.