* "Very good and acceptable compromise" - IG Metall union
* Pay deal over 13 months, starting June 1
* Labour costs a growing concern, says Chambers of Industry
(Adds background, more comments from analyst and VW/IG Metall)
By Andreas Cremer
HANOVER, Germany, May 31 Volkswagen
will grant workers at its German factories a 4.3 percent pay
increase despite difficulties in core western European markets
amid the euro zone debt crisis.
The 97,000 workers at VW's six western German plants and
5,000 employees at the financial services division will receive
the additional pay over 13 months, starting June 1, Europe's
largest carmaker said on Thursday. Under the new contract, as
many as 3,000 temporary workers will be hired permanently.
"This is a very good and acceptable compromise," Hartmut
Meine, chief negotiator for the IG Metall union, said at a press
conference in Hanover, Germany. "We got a bit more than the
Earlier this month Germany's largest labour union agreed
with employers to increase wages across the country's metal and
engineering industry by 4.3 percent. The increase will benefit
3.6 million workers at companies including Daimler
The pay deal is equivalent to slightly less than 4 percent
when VW's terms of duration are applied.
"The VW accord seems reasonable," Alexander Schumann, chief
economist of the Berlin-based DIHK industry and trade chambers,
VW, which posted a 10.2 percent increase in first-quarter
operating profit to 3.2 billion euros ($3.97 billion), is
battling with declining sales in core western European markets.
The group's four-month deliveries in the region, excluding the
sturdy German home market, fell 5.9 percent to 661,400 vehicles.
"Workers will earn a decent pay increase," said Martin
Rosik, VW's chief negotiator.
Rosik added that the new pay agreement will not improve VW's
fight against growing competition from low-cost Asian markets,
where Hyundai Motor and Kia Motors are
based, though he would not specify the total cost burden of the
new pay agreement.
Alexander Schumann, chief economist of the Association of
the German Chambers of Industry and Commerce, told Reuters: "The
wage agreement looks reasonable but labour costs are becoming a
growing concern to engineering companies. Companies must decide
for themselves what level of costs they can bear."
Meine, who also sits on VW's supervisory board, said that
the prolonged European debt crisis may lead to shorter wage
agreements, hailing the VW deal's 12-month maturity. "No one can
realistically say what the economic and financial situation in
the euro zone will look like in a year from today," the union
IG Metall said that VW agreed to provide 10 percent more
apprenticeships and will pay apprentices a 200-euro annual bonus
from this year. Temporary staff may be hired after 36 months,
though this period can be shortened to 18 months.
VW's previous in-house pay deal, in February 2011, increased
wages for German workers by 3.2 percent. The agreement, covering
16 months, also granted workers a one-off payment worth 1
percent of their base salary.
($1 = 0.8069 euros)
(Reporting by Andreas Cremer; Editing by David Goodman)