VW, IG Metall unveil 3.2 percent pay raise deal

8th February 2011, Comments 0 comments

The biggest European carmaker, Volkswagen, said Tuesday that it has agreed to a 3.2 percent wage raise with the trade union IG Metall, sending a sign to the rest of the country's industrial sector as the eurozone looks to German consumption to help sustain its recovery.

VW and IG Metall also agreed to a one-off bonus equal to one percent of a worker's annual pay, with a minimum payment of 500 euros ($680), a statement said.

The pay increase is to take effect on May 1, effectively bringing it forward by eight months, VW added.

"The company and IG Metall have found a fair solution that offers a very decent rise in pay while preserving competitiveness," VW personnel director Horst Neumann was quoted as saying.

The agreement is valid for 16 months, and "keeps sight of the economic conditions for Volkswagen," the group's chief negotiator Jochen Schumm added.

Like German rivals, VW had thousands of employees work shorter hours during the global economic slowdown while unions kept pay demands to a minimum to preserve jobs.

With auto production on the rise again, companies like VW and parts group Bosch have sought ways to pay staff back for sacrifices without eroding their own competitive positions.

Falling unemployment and higher wages meanwhile could encourage consumption in Germany, which has the biggest economy in Europe.

© 2011 AFP

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