Agreement at Autoeuropa prevents 800 redundancies

Download article in original language : PT0312101NPT.DOC

In November 2003, management and the workers' commission at Volkswagen Autoeuropa's car plant at Palmela, Portugal, concluded an agreement that prevents 800 redundancies threatened as a result of a fall in production. There will be a pay freeze until 2005, compensated by a guarantee of no collective redundancies before December 2005, 12 additional paid days off a year during production stoppages, a one-off payment in 2004, additional annual leave and other benefits.

On 20 November 2003, negotiations between management and the workers' commission at Volkswagen Autoeuropa- the Portuguese subsidiary of the German-based motor manufacturing group - plant at Palmela resulted in an agreement. The agreement ends the threat to some 800 of the 3,300 jobs at the factory caused by a forthcoming fall in production, and guarantees workers a '15th month' wage payment once production levels return to normal, which should happen in 2006 with the introduction of a new vehicle. Until then, wages will be frozen in 2003/4 and 2004/5, with a return to the normal pay bargaining system from September 2005. By way of compensation, workers will receive EUR 550 each in September 2004.

The forecast production levels at Palmela for 2004 and 2005 will enforce stoppages of 35 days and 43 days respectively. During 2003, there have been 16 days of ceased production, and they were dealt with by a collective agreement that was considered historic in the Portuguese industrial context and which prevented the redundancy of approximately 300 of the 3,300 workers (PT0306101N). The agreement (which came into force in June 2003) required the workers to forgo a pay rise for one year. In return, they were guaranteed a 'credit' of 10 paid days off during periods when production stops and the maintenance of their jobs. These days will be added to 12 further days off negotiated as part of the latest agreement. In total, workers will be paid for 22 days even though they have not worked them. This credit will have to be offset in following years.

The guarantees provided by the November agreement are as follows:

  • there will be no collective redundancies before December 2005;
  • the current system of two rotating shifts will be maintained;
  • workers will be entitled to an additional 12 paid days off during periods when production stops, on top of 10 days already agreed as a result of stoppages previously announced, making a total of 22 days;
  • a payment of EUR 550 to each worker to cover the period from October 2004 to December 2005;
  • improved annual leave, with entitlement increasing to a minimum of 23 days for all workers and 24 days for workers with up to 24 hours of absence from work during the year, and 25 days for workers with no more than eight hours of absence;
  • a bonus for workers attending study courses of EUR 180; and
  • improvements in life insurance provision.

The problems that Autoeuropa is facing are directly related to the crisis currently being experienced in the automobile sector, as a result of the recession that is affecting all areas of the Portuguese economy. Car sales have been particularly affected and are approximately 25% below the figure of two years ago. In this context, Autoeuropa is seeking to respond to the fall in demand through a working time model that avoid redundancies.

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