VW Approves 5.7% Pay Increase for Workers in Germany image

VW approved a rise of 5.7% for the German workers over the next 20 months.

VW agreed to increase salaries by 3.4% beginning September 1st and another 2.2% beginning July 1st 2014. The contract terms are the same reached with IG Metall labor union earlier this month for almost 770, 000 manufacturing workers in the state of Bavaria. This agreement is used as a model for all labor deals in Germany.

During the first quarter VW’s economy increased only 0.1%, as the euro area economy is expected to shrink for the second straight year in 2013. Workers and the IG Metall union have taken into consideration the strengths and weaknesses of the regional industry for the pay accord. Losses in Europe were offset by VW’s expansion in China and also by profits from Bentley, Audi and Porsche.

From January to April, VW sold more than 3 million vehicles globally, a record for this period. VW’s EBIT increased 2.1% in 2012 to 11.5 billion euro and the automaker expects this year to have an increase in revenue, due to increased sales, but the operating profit is forecast to match the one from last year, due to the slump in Europe and the spending for new factories and vehicles.

Source: Bloomberg