Wed, Feb 09, 2011 - Page 10 News List

Volkswagen reaches wage agreement

REUTERS, HANNOVER, GERMANY AND BLOOMBERG

Volkswagen (VW) and trade union workers yesterday agreed on a 3.2 percent pay rise deal for around 100,000 workers in Germany, setting the stage for a potential wage improvement in other industrial sectors.

The deal, struck in the early hours after marathon wage bargaining talks that started on Monday, also includes a one-time payment of 1 percent of annual wages or at least 500 euros (US$680) per person and runs for 16 months from May 1.

Economists are keeping a close eye on developments in German wages as a signal both for a potential improvement in household spending as well as for second-round inflationary effects.

The deal between VW and its workers is seen as an indication for collective wage bargaining in the engineering sector.

German unions rejected on Friday a VW offer that would give workers a pay rise of 2.9 percent over the next two years and a one-time payment of 300 euros before the end of June.

IG Metall had demanded a 6 percent wage increase.

In January, German consumer prices rose at their fastest pace since October 2008, with policymakers and business leaders beginning to worry about the threat of a long period of high inflation in Europe, a stark contrast to the past decade.

The company halted production at its headquarters factory in Wolfsburg, Germany, and a plant in Emden on Jan. 31 because of a shortage of components, affecting output of 4,100 Golf hatchbacks, Tiguan sport-utility vehicles, Touran minivans and Passat cars. VW aims to increase deliveries this year by 5 percent after record sales of 7.14 million vehicles last year.

VW said in November that it plans to invest 51.6 billion euros in the automotive business through 2015 to help reach a goal of surpassing Toyota Motor Corp in sales and profit. The company aims to create 50,000 jobs globally by 2015, with about 10 percent of the new positions in Germany, the second--biggest market for VW after China.

Jochen Schumm, VW’s pay negotiator, had said earlier a 2.7 percent pay-raise agreement for engineering workers that IG Metall reached with German manufacturers last February should be the guideline for VW’s negotiations.

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