General Motors will place 800 of its workers at its plant near Sao Paulo, Brazil on paid leave for five months.
The development comes as a result of a two-week strike following workers reactions to GM’s original plan that involved simply eliminating the jobs. The Brazilian government and GM will each pay half of the the workers’ wages for the five months, after which the workers will likely be released due to weak demand for new cars in the country, according to company spokesman Nelson Silveria.
Car sales in Brazil fell 20 percent during the first seven months of the year, with some reports pegging GM’s slide at 26 percent. Even so, GM announced on July 28th that it will invest $1.9 billion in Brazil and double its spending in the country to $3.8 billion for 2014 through 2019 to develop new Chevrolet vehicles.
On a more macro-scale, Brazil is currently undergoing a deep economic depression amidst a political crisis. Unemployment is at a five-year high and Moody’s Investors Service predicts that the country’s economy will contract by 2 percent in 2015. The state of affairs has political figures and some of the public calling for the resignation of President Dilma Rousseff.