FRANKFURT -- Volkswagen AG unveiled a seven-point plan on Monday as the basis for closely watched wage talks on a new contract for 103,000 staff at six plants in western Germany.
The IG Metall metal workers' union and the German carmaker's works council have demanded a 4 percent pay rise and sweeping job guarantees for about 10 years.
The talks start Sept. 15 and are due to wrap up by the end of October. VW wants to implement the seven points over the next six years.
PAY FREEZE FOR 2 YEARS
"There is no leeway for pay increases," VW personnel chief Peter Hartz said, citing difficult market conditions, relatively high labor costs compared with German rivals and the gap between VW's foreign and domestic manufacturing plants. But he said VW's plan offered a way to preserve German jobs and avoid relocating production to lower-cost plants abroad.
VW aims to reduce the number of wage tiers to 12 from 22 and slash the number of job classifications. As of 2005, it will pay new hires in western Germany along the lines of its Auto 5000 system that compensates workers by the number of cars they make. Bonuses will be linked to performance so that in the long term variable pay will make up 30 percent of workers' income.
VW has suggested widening the band of time accounts -- a system in which staff put in longer hours at busy times and then draw down these labor accounts when demand slackens -- to 400 hours from 200. This would cut overtime pay and boost flexibility.
NEW DEFINITION OF WORKING TIME
Young people would work more, older staff would work less under a system of building up lifetime flex time accounts. VW would not pay all hours on the job alike but would instead pay more for time spent on production and less for breaks, communication and qualification activity.
VW would introduce health care options and insurance, especially for older workers, in return for worker concessions on hours or pay.
COMPETITION FOR WORK
Individual plants in Germany would get more leeway to compete for production allocations by temporarily offering longer working hours that could help offset one-off investment costs.
VW will increase the number of apprentices it takes on by 20 percent -- more than it requires -- but only hire as many qualified staff emerging from the program as it needs. Pay rates for apprentices would also fall to the level set under sector-wide pay deals agreed by unions.