Two-tier wage system established at Volkswagen

On 30 April 1997, Volkswagen announced the creation of several hundred temporary jobs. According to an agreement between the company and the IG Metall trade union, the new temporary staff, although being hired on the terms of the current company agreements, will be paid 10% less than core employees. This agreement establishes a two-tier wage system at Volkswagen.

During the fourth bargaining round for its 90,000 employees, the German car producer Volkswagen AG announced the creation of several hundred new jobs. According to an agreement between management and the IG Metall trade union, the newly hired employees will be employed exclusively on a temporary basis and will de facto be remunerated below the level of the company agreements. Although being hired on the terms of the current company agreements, the newly hired employees will not be eligible for the compensatory extra pay component which was agreed when Volkswagen established the four-day working week in 1994, and thus they will be paid 10% less than core employees. According to the agreement, details will be fixed by the social partners at establishment level. During the negotiations, the IG Metall rejected Volkswagen's plans to pay the newly hired employees according to the branch-level metalworking agreement. The compensation of the new temporary staff will still be around 10% higher than the pay other employees receive on the basis of the current branch-level metalworking agreement.

In the course of the 1997 collective bargaining round, Volkswagen aims to cut costs and increase workforce flexibility. On 21 March, the company established a share option programme for all employees. In April 1997, Volkswagen failed to create an internal temporary employment agency with employees who would have received compensation according to the current branch-level metalworking agreement, and below the rate of the current company agreement (DE9704210N). On 17 April, IG Metall demanded the creation of new jobs, backed by the threat of boycotting overtime. On 9 May, Volkswagen announced the creation of several hundred jobs at its regional subsidiary Volkswagen Sachsen. The east German establishments of Volkswagen are not covered by the company agreement, but by the branch-level agreement for the Saxon metalworking industry.

Bargaining issues currently under negotiation at Volkswagen are working time flexibility, employment guarantees, sick pay, pay for part-time work for older workers, general pay increases, and a new collective agreement for internal services.

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