Agreement at Volkswagen plant guarantees wage increase and more jobs

Following intense negotiations, the Portuguese Volkswagen plant Autoeuropa and the company’s works council reached a ‘pre-accord’ agreement aimed at establishing a mid-term agreement on flexibility and job guarantees for2006–2008. On 18 October 2006, all Autoeuropa workers were called to vote on this mid-term agreement. The vast majority of workers participated in the vote, and 62% of workers approved the agreement. The agreement aims to prime the company for the Volkswagen Group’s internal competition for production of its new multi-purpose vehicle.

Company profile

Autoeuropa is the only car manufacturing plant in Portugal and the company maintains a highly important role in relation to the economy and the labour market. Since its establishment about 10 years ago, the company has been an example of innovative solutions, negotiated between the works council and management.

Pre-accord agreement

On 18 October 2006, workers at Autoeuropa voted in favour of a ‘pre-accord’ agreement, which the works council had previously negotiated with the company. The agreement aims to get the company into shape for the Volkswagen Group’s internal competition for production of the new multi-purpose vehicle (MPV). Around 84% of the workers participated in voting on the agreement, which was in the end approved by 1,473 of the workers, or 62% of the workforce.

Main terms of agreement

The agreement is valid for two years and runs from 1 October 2006 to 30 September 2008; it covers a range of issues related to the reduction of labour costs and increased flexibility.

In relation to wage policy, the measures aim to reduce costs and maintain employment levels. The agreement provides for a wage increase of 4.5%, which was to be introduced in October 2006, along with a 1% wage increase two years later, on 30 September 2008. Moreover, it stipulates that the payment of supplementary working hours will be reduced from 200% to 100% of the hourly wage.

As part of the agreement, a special bonus is also to be introduced in November 2006, to reward the adaptability of workers to new products. Accordingly, operators will receive a bonus of €1,200, while specialists, that is high-skilled workers, will be rewarded according to individual performance, with a minimum guarantee of a €1,200 bonus. Workers who are hired after June 2006 will receive 50% of this bonus amount. Furthermore, during the two years of the agreement, in 2007 and 2008, a bonus related to the fulfilment of objectives will be set in place and paid to the workers in March 2008 and 2009.

Evaluation of temporary contracts

Given that the next three years are expected to bring remarkable change in terms of labour supply, the company is committed to assessing the situation, with plans to convert temporary contracts into permanent ones depending on the internal situation, the market situation and financial indicators. The evaluation of temporary contracts will, in turn, be implemented in cooperation with the workers, while their conversion into permanent contracts will be dependent on individual performance evaluation.

In cases where disagreement arises in relation to the performance evaluation results, the worker is entitled to request another opinion from those higher up in the hierarchy; the works council will be allowed to participate in this process, if requested by the worker concerned.

The agreement also includes special conditions for pregnant women, with continuous or rotating working time schedules.

Commentary

According to the coordinator of the works council in Autoeuropa, the agreement will ensure the continuity of the plant for another 10 years, along with the creation of 3,000 more jobs. This reassurance will be welcome to the workers who had no doubt noted the decision of General Motors (GM) Europe to close its Opel Azambuja plant on the outskirts of Lisbon and to transfer production abroad (PT0609019I).

Maria da Paz Campos Lima and Reinard Naumann, Dinâmia