Volkswagen AG, Europe's biggest carmaker, is open to labor union demands for job guarantees if workers agree to work longer for the same pay, company and union officials said.
Volkswagen is seeking drastic cuts in production costs for VW-brand vehicles such as its flagship Golf, which is selling strongly but bringing in little profit.
In return, the IG Metall union wants the Wolfsburg-based company to guarantee production levels at the six factories in western Germany that make VW cars -- protecting jobs and ensuring all the plants stay open.
After preliminary talks on Friday, union negotiator Hartmut Meine said Volkswagen was ready to give "binding and lasting pledges on production and investment for the six German locations."
Volkswagen negotiator Klaus Dierkes said a "big step" had been taken toward an agreement. Volkswagen had offered "very concrete prospects on the subject of employment," he said.
Neither side would give details.
The company's personnel chief Horst Neumann said earlier on Friday that performance-related pay for VW workers could also be "an important part of the solution."
Meine said IG Metall could enter full-blown negotiations with the carmaker later this month.
VW chief executive Bernd Pischetsrieder has said he wants an agreement by November so that the firm can take decisions on future investments.
The VW division, which also includes Skoda and Bentley, introduced the four-day, 28.8-hour work week back in 1994 during a downturn in sales in order to save some 30,000 workers from redundancy.
However, it now wants to double back while holding wages steady, arguing that the cost of making VW cars is too high compared to its more profitable Audi brand or rivals such as Mercedes and Porsche.