Germany: VW and IG Metall union agree on pay raise and pensions image

Volkswagen Ag, the world’s second largest automaker and the biggest in Europe and Germany will give its home workers a salary boost of 3.4 percent, even though the carmaker has embarked in a cost cutting strategy to lift profitability.

According to the company, around 115,000 employees at its six German plants of the western part of the country and its financial services unit will get the raise since June. The German workers will further receive each 450 euros into a staff pension account over the next 12 months, part of the agreement for the new wage contracts that have been signed until May 31, 2016. “The agreement we have reached represents a compromise that is just about acceptable and allows us to maintain our competitiveness in a difficult economic environment,” commented VW’s human resources boss Horst Neumann.

The powerful IG Metall union initially asked for a pay increase of 5.5 percent but agreed to the new contract after it also included a pledge to boost VW’s apprenticeships for the 2015 to 2017 period by 4,200 new positions. “This is a good pay deal with a decent amount of cream on top,” agreed union chief pay negotiator Hartmut Meine. The deal falls in line with IG Metall’s last month negotiation with employers from the engineering sector in Germany’s southwestern state of Baden-Wuerttemberg – usually seen as a pilot for other industry sectors.

Meanwhile, even as the automaker reached record profits last year, Wolfsburg-based VW AG announced it was taking a cautious approach to 2015 after the deliveries of its core passenger car brand posted four straight months of declines in key markets such as Europe and China.

Via Reuters