German Union, Volkswagen Agree to Hiring Proposal
BERLIN — Deals to hire employees without all the treasured perks given German workers normally would cause an outcry from unions, but a plan by Volkswagen to do just that is getting uniform support--as a means to encourage flexibility and fight unemployment.
VW, Europe’s largest auto maker, agreed Tuesday to hire 3,500 workers to produce a new minivan in its home base of Wolfsburg. The catch: While their wages are about the same as others, they have limited overtime and are responsible for keeping up the pace and quality of production. If they fall behind, they have to work longer hours--without extra pay.
Chancellor Gerhard Schroeder, a Social Democrat closely allied to the unions, praised the deal for showing “courage, flexibility and a sense of responsibility.” The IG Metall union that negotiated the deal said it was “an outcome in the interests of the jobless and employees.”
In times of high unemployment, German businesses have shown they can win changes to the rules.
Volkswagen has gotten unions to go along with concessions to avoid moving jobs abroad, starting with an agreement to move to a four-day workweek in 1993. Later came early retirement, one-year “apprentice” contracts and comp time--programs that later were followed by other car makers.
Every pact that secures German jobs is a boon to Schroeder, who is under enormous pressure to reduce unemployment. He has conceded it is unlikely he will meet his campaign promise of reducing unemployment to 3.5 million by the date of national elections next year.
After declining in 2000, the number of jobless people has risen this year to 9.2% in July, or 3.8 million unemployed.
The chancellor has lambasted industry for not helping because it allows too much overtime, and attributes Germany’s stagnating economy to the slowdown in the United States and Japan.
Praising the VW agreement, Schroeder said it showed how jobs could be created in Germany without liberalizing the labor market to the extent of the United States. He rejected giving employers free reins to hire and fire, a move that would fundamentally shake Germans’ notions of stability at the workplace.
“The traditional strengths of the social market economy and the German business environment will thus be put to use anew under the conditions of globalization,” he said, urging other companies to seek similar “innovative solutions.”
The VW agreement came after pressure by the state of Lower Saxony where it is located: The regional government owns more than 18% of the car maker, and Schroeder was once governor there and sat on the company board.
Under the deal, employees will work an average 35 hours a week at a salary of $2,350 a month, plus a minimum bonus of $235, said IG Metall’s chief negotiator Hartmut Meine.
The original plan involved 5,000 workers, but the two sides could not reach agreement on 1,500 workers who were to be hired at a VW plant in Hanover, Germany, officials said.
The union won substantial changes from the company’s original proposal. Volkswagen had wanted to bar overtime, but agreed in the end to pay overtime if the company was deemed to bear the responsibility for it needing to be done.
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