Volkswagen AG, the country’s biggest automotive employer, agreed to give 100,000 western German workers a 3.2 percent pay raise to prevent strikes as VW boosts production to meet record demand. The company said the pay increase takes effect on May 1, 2011, with workers receiving a one-time payment of one percent of their base annual salary for the first three months of the deal.
The deal with VW, which has 170,000 employees in Germany, may be a benchmark for other unions seeking a bigger reward for workers in a country leading Europe's economic recovery. The 16-month contract runs from Feb. 1, 2011 through May 31, 2012.
VW has plans to increase 2011 sales by five percent after record 2010 deliveries of 7.14 million vehicles.
VW is struggling to keep up with demand after a components shortage halted production at the main Wolfsburg factory in January 2011. VW's preferred shares increased as much as EUR2.20, or 1.9 percent, to EUR121.20 and were up 1.5 percent to EUR120.80 as of 10:35 a.m. in Frankfurt trading.
In 2011, the stock has dropped 0.5 percent, valuing the carmaker at EUR54 billion ($73.5 billion). Tim Schuldt, an analyst at Equinet AG in Frankfurt with a “buy” recommendation on the shares, said the deal reflects the high capacity utilization at VW.
He also believes that it means that the company wanted to avoid disruptions to production because of walkouts. [via autonews - sub. required]