In late June 2001, Volkswagen (VW) and the IG Metall metalworkers' trade union failed to agree on the pay and conditions to apply to workers employed under the company's proposed "5,000 x 5,000" project. In late 1999, the motor manufacturer had presented a plan to create 5,000 new jobs, with the employees concerned receiving fixed monthly pay of DEM 5,000. Under the proposals, new employees would work as long as necessary to reach production targets (up to the statutory maximum working week of 48 hours), over six days a week (excluding Sundays). Although both sides made concessions during bargaining, in June differences concerning working time and pay brought the negotiations to an end for the time being.
In a sixth round of talks on 25 June 2001, Volkswagen AG (VW AG) and the IG Metall metalworkers' trade union failed to agree on acceptable pay and employment conditions for new jobs to be created at the company's production sites at Wolfsburg and Hannover.
In late 1999, Peter Hartz, the VW employee director (the member of the management board responsible for personnel matters), presented a new plan for the creation of 5,000 new jobs in the production of a new wide-bodied multi-purpose van (A-MPV) and camper vans, with the employees concerned receiving monthly pay of DEM 5,000 (DE0003251F). Under the plan, abbreviated as "5,000 x 5,000", the new employees were to work over six days per week, with the exception of Sundays. The idea was that these employees would be obliged to work as long as necessary to reach the production target (up to a statutory maximum working week of 48 hours) without any extra pay. The fixed wage of DEM 5,000 per month would be paid irrespective of the working time performed. Mr Hartz's plan was based on the idea of a "breathing factory", which is able to adapt its production to demand. VW, which wants to start production of the new van in September 2002, sets the whole idea in the context of global competition. According to Mr Hartz, the "5,000 x 5,000" model should be seen as an attempt to create new jobs in motor manufacturing in Germany, whereby VW aims to achieve the same level of costs as found in Portugal.
Along with the company agreement at VW (DE0010286N) and the collective agreement for the service workers at the Autostadt theme park (DE0008274N), the proposed agreement for the "5,000 x 5,000" workers would have been the third collective agreement to apply within the VW corporation.
During the negotiations over the "5,000 x 5,000" scheme, both sides made concessions. VW offered a maximum weekly working time of 35 hours with a gross income of DEM 4,500, though with employees obliged to participate in extra "qualification time" of 7.5 hours per week, which was also to be used for production if necessary. These hours would have been compensated with a lump-sum monthly payment of DEM 500. IG Metall, for its part, was ready to accept a 35-hour working week, with employment terms governed by the metalworking sector collective agreement for Lower-Saxony instead of the more advantageous VW company agreement, which guarantees not only higher income but also a 28.8-hour week (although the average effective working time at VW is about 32 hours per week). Concerning additional qualification time, IG Metall took the standpoint that, in principle, qualification and skill upgrading should be part of the regular working time. The only exception should apply to formerly unemployed workers.
IG Metall did not accept the decoupling of working time, pay and performance, arguing that on the individual level employees need working time schedules they can rely on, and that longer working time might lead to a reduction of jobs in the future. Furthermore, IG Metall and VW view the level of pay for the "5,000 x 5,000" workers differently. While the company compares their pay only to the basic pay laid down in the Lower-Saxony metalworking collective agreement, IG Metall includes extra payments in the comparison and thus concludes that the offered pay rate of DEM 5,000 is not only below the terms of the VW company agreement but also below the terms of the Lower-Saxony metalworking agreement. Therefore, IG Metall wants to retain the existing regulations on extra pay for night and Saturday work, which are to be cut under VW's "5,000 x 5,000" proposal. On 25 June 2001, the negotiating committee consisting of IG Metall representatives and VW works council members rejected the company's latest proposal, arguing that it was not acceptable concerning the central points of working time and pay.
In the run-up to the negotiations at VW, talks were held among the group works councils of the motor manufacturers Ford, Audi, BMW, Opel, DaimlerChrysler and VW, in which they came to an agreement on the pay and employment conditions standards which should be maintained for the employees taken on to produce the new model at VW. The head of the works council at DaimlerChrysler, Erich Klemm, stated that a "dramatic change" at VW would mean great pressure on the other works councils, as all motor manufacturers are interested in new approaches which save money. Therefore the planned decoupling of working time and pay at VW would have seriously damaged the entire system of collective standards and would have endangered the future of sectoral agreements. The support of the other works councils for the position of IG Metall was not reflected in public opinion, which was largely critical of this standpoint. Many newspaper comments described the union's behaviour as arrogant and as proof that IG Metall is a union for employees only, and that it does not care about unemployed people.
According to VW management, 10,000 unemployed people have already applied for a job within the "5,000 x 5,000" programme. In an interview, Martin Kannegiesser, the president of the Gesamtmetall metalworking and electrical employers' association, stated that it was not understandable that IG Metall had rejected the opportunity for 5,000 unemployed people without specific qualifications to obtain a three-year job on DEM 5,000 per month, plus training and qualification which would have opened opportunities for better jobs in the future.
In a detailed newspaper article, Klaus Zwickel, the president of IG Metall, argued that the failure of the negotiations should not be reduced to the length of working time, the proposed pay and the number of additional employees. The problem was more grave, relating to the question of the conditions under which motor manufacturing in Germany is possible - a question which requires ideas for solving the problems proactively. Although the "5,000 x 5,000" model contains some interesting aspects, it abandons a number of basic standards which are necessary for the future of industrial production in Germany. Mr Zwickel emphasised that the "5,000 x 5,000" proposal was not planned as an exceptional scheme for a company which might be faced with bankruptcy, but must be seen as the beginning of a development which could influence bargaining policy not only at VW but in the whole metalworking industry, and might erode sectoral agreements. In this context, the proposed new working time rules together with the lower and fixed pay might have led to a new trend within the German metalworking and electrical industry, which would have resulted in more unemployment in future. Therefore, he refused to accept the allegation that IG Metall did not care about unemployment.
Mr Zwickel argued that the fact that his union would not accept conditions for unemployed people - a group in a weak position - which are not only worse than those which apply to already employed workers and are laid down in the collective agreement, but are also based on fixed three-year contracts, proves that IG Metall cares about the interests of unemployed people too. He asked: "Who is going to employ unemployed people under the conditions laid down in the collective agreement if IG Metall is preparing the way for a contradictory development in a company where the union has a strong position?" In his opinion, IG Metall's support for the basic principle that unemployed people should be employed under collectively agreed employment conditions demonstrates clearly that unions do represent the interests of both unemployed and employed workers.
From IG Metall's viewpoint, the negotiations at VW may restart at the end of August 2001. Hartmut Meine, head of the union's Hannover region, states that IG Metall is still interested in finding a way to regulate the "5,000 x 5,000" project through collectively agreed standards, but that it is the turn of VW to make new proposals. He summarises the key demands of IG Metall in three points:
IG Metall would be willing to agree on revised provisions on work organisation, qualification, co-determination rights and the measuring of performance. In a press release, Klaus Volkert, head of the group works council at VW, and Mr Zwickel made clear that the group works council and IG Metall do not differ in their assessment of the VW proposal, and are following a common strategy for future talks.
At first sight, the attitude of IG Metall might generate scepticism, as the level of unemployment in Germany is high and the VW proposal would have opened opportunities for about 5,000 unemployed workers. However, a closer look might lead to different conclusions. Given that VW is in an economically stable position, there is no obvious reason to accept conditions for new employees which are worse than those which apply to already employed workers and which are laid down in the collective agreement. IG Metall has faced a situation where it might be possible to give a job to 5,000 people, but this could have led to worse employment conditions for a majority of workers in the long run, as the longer working time, lower wages and "programmatic pay" proposed by VW might have led to an erosion of sectoral agreements and a danger for the whole system of collective bargaining.
The attitude of IG Metall towards the "5,000 x 5,000" model was supported by a commentary on the failure of the project in the newspaper Financial Times Deutschland, which puts the key problem in a nutshell: Given that - considering their working time - the 5,000 newly employed workers would have earned not only less than their colleagues at VW but also less than the sectoral agreement in Lower Saxony lays down, it is understandable that this was not acceptable for unions. As there is no necessary economic reason to depart from the principle of equal income for equal work in this case, the newspaper gives an analogy: it is unlikely that VW would pursue the idea of paying women 50% less than the collectively agreed wage in order to stay competitive. If it did, nobody would welcome such an idea even if this led to lower unemployment among women. (Alexandra Scheele, Institute for Economic and Social Research, WSI)