Innovative working time agreement at Autoeuropa

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An agreement signed by management and the workers' commission at the VW Autoeuropa car plant in Portugal has prevented 570 redundancies among the 3,200 employees or lengthy shutdowns, threatened as a result of a fall in production. Under a new 'time account', scheme, workers will forgo a 3.3% pay rise in 2003 and convert it into 10 days off per year, which will be taken on days when the plant is shut down. The agreement came into effect in June 2003.

In June 2003, an innovative working time agreement concluded by the management of VW Autoeuropa- the Portuguese subsidiary of the German-based motor manufacturing group, Volkswagen, located at Palmela, near Lisbon - and its workers' commission came into effect. The company produces cars and represents 2% of Portuguese GDP and 8% of Portuguese exports.

VW Autoeuropa is facing a difficult global and Portuguese economic climate, with a negative impact on the car industry, resulting in a fall of production and a need to cease production on a number of days. Accordingly, in 2003, production is planned to be 108,686 units, which would mean 16 days of shutdown. Due to a predicted further decline in the state of the market, a more negative scenario is forecast for 2004, with 35 days of shutdown and a forecast volume of 94,709 units. Management stated that the plant would either have to remain inactive for 51 days over 2003-4 or dismiss 570 of its 3,200 employees on open-ended contracts.

The trade unions made a counterproposal in order to avoid the job losses, which led to the signing of an agreement, regarded as historic, aimed at allowing VW Autoeuropa to endure less prosperous periods without having to dismiss staff. Autoeuropa has been negotiating internal agreements with its workers' commission on an informal basis since 1994, but the new accord is particularly innovative.

The agreement provides for workers to forgo pay rises in return for 'non-working' days off on 'shutdown days' when production is halted. These production stoppages will enable the company to adjust production volume to the requirements of the market and achieve a stable situation. They may be used in low-volume years, and will subsequently be compensated for. The calculation is that every 1% of forgone pay increase is worth three non-working days, and it was thus agreed that a 3.3% pay rise in 2003 would be converted into 10 non-working days per year. This guarantees entitlement to 10 non-working days in subsequent years. The entitlement to days off is placed in a 'time account' (conta de tempo). Days off resulting from the scheme will be taken on a collective basis, whenever a shutdown day is scheduled. Shutdown days will be scheduled adjacent to weekends, public holidays, holidays or other shutdown periods.

Employees who are requested to work on collective shutdown days will be entitled to take a day off at a later date, with the agreement of their head of department, at the beginning or end of a shift and up to 31 March of the following year.

The parties believe that the agreement represents an important step, which will prevent job losses. Moreover, through this deal, Autoeuropa believes that it is demonstrating that it is prepared to face future challenges, given that it has a qualified workforce, an installed capacity and is adaptable to the fluctuations of the market.

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