Volkswagen has signed an agreement to increase the wages of its German workers by 5.7 percent over 20 months. VW said in a statement that it is bound to increase base pay by 3.4 percent by September 1, 2013, and another 2.2 percent by July 1, 2014. The terms of the contract are in line with an industry-wide pay hike that the IG Metall union grabbed in mid-May 2013 for around 770,000 manufacturing workers in the state of Bavaria.
The same agreement is being used in other parts of Germany as a model for labor agreements. The VW accord was negotiated separately from IG Metall's regional labor deal and covers around 102,000 workers at six sites in western Germany and the financial services unit. Volkswagen currently employs around 249,000 workers in Germany and less than 550,000 people around the world.
According to the Federal Statistics Office, the German economy posted only 0.1-percent growth in the first quarter of 2013. The Eurozone economy, meanwhile, is expected to shrink for the second year in a row in 2013.
The wage increase for Volkswagen’s German workers comes as the carmaker managed to offset the effect of slowing demand for volume vehicles in Europe thanks to its strong performance in China as well as to the profit posted by its Audi, Bentley and Porsche brands.
Volkswagen delivered over 3 million cars, vans and trucks around the world in the first four months of 2012, the first time the carmaker surpass the figure in the period.
In 2012, Volkswagen posted a 2.1-percent jump in earnings before interest and taxes to EUR11.5 billion ($14.9 billion). For this year, the German carmaker is expecting to post a jump in revenues due to higher vehicle sales. It also expecting its operating profit to be similar to its figures posted in 2012. [source: bloomberg]