FRANKFURT -- Volkswagen AG management has offered to freeze its own pay for two years in a bid to gain workers' support for an austerity drive, but union mediators dismissed the move as a "distraction tactic."
The overall salary of managers at Europe's biggest carmaker would hold steady if the 103,000 workers at its six western German VW plants accepted the same wage freeze when the two sides meet in formal talks next month, the company said.
"Everyone will naturally help contribute in the case of a pay freeze at Volkswagen," a spokesman said, adding that CEO Bernd Pischetsrieder has repeatedly stated that management's salaries are linked to the company's performance.
On Monday, VW personnel chief Peter Hartz rejected union demands for a 4 percent pay raise, saying there was "no leeway" for wage increases for the next two years.
The German metal workers' union IG Metall, which has also demanded job guarantees for the next decade, fired back with accusations of "exorbitant" management demands and threatened to escalate the conflict.
On Friday, IG Metall's regional head Hartmut Meine spurned the offer as a bargaining maneuver, reaffirming his demand for a wage increase for the 103,000 workers.
"Pay freezes for the top are not the same as pay freezes at the bottom," he said in a statement, calling a wage increase "indispensible."
VW's Hartz -- also the main architect of Germany's controversial labor reforms -- plans to save roughly $2.4 billion in personnel costs over the next six years.
In its successful campaign to cut $600 million in annual labor costs in return for job guarantees, German rival DaimlerChrysler AG made a similar offer to forego management salary increases in order to quell hostilities.
VW recently warned it would miss its 2004 profit target by about $723 million, and added it expected a further $482 million in one-off charges this year.
Volkswagen and other German carmakers need to slash their cost base to stay competitive in an environment of slack demand and pricing pressure.
General Motors' German unit Adam Opel AG confirmed a report in the Bild newspaper on Friday that it wants to freeze pay until 2009, increase the workweek for employees to 40 hours without extra compensation, end late-shift bonuses and scale back holiday pay as part of its demands for upcoming wage talks.
A flier distributed to Opel's employees by the carmaker's works council described the package as "so extensive" that it required broad discussion among the work force.
Neither the VW works council nor IG Metall were available to comment on the potential pressure that Opel's demands would exert on VW's work force.