New Union Agreement Gives Some of Volkswagen’s German Employees Extra Time Off

New Union Agreement Gives Some of Volkswagen’s German Employees Extra Time Off

A new union deal in Germany covering some 120,000 Volkswagen workers will give some of them the option of swapping some of their pay for additional time off, CNN Money reports:

Volkswagen said the workers will get a 4.3% pay rise starting in May, and from 2019 an extra 2.3% bonus and more pension benefits. Night shift workers, and those caring for children and elderly relatives, can swap the new bonus for six extra days off. If they do, they’ll be entitled to about 45 paid days off each year, including public holidays.

Volkswagen Group — which also owns the Audi and Porsche brands — employs about 286,000 workers in Germany and 350,000 in other countries. German workers are taking advantage of low unemployment and strong economic growth to flex their muscles at the negotiating table.

The deal between Volkswagen and the IG Metall labor union comes after the first strikes the company had seen since 2004, Reuters adds, and represents a compromise between the union’s demands for a 6 percent raise and the company’s initial offer of 3.5 percent initially and a further 2 percent over 30 months. It also includes a significant boost in the amount of money Volkswagen contributes to employees’ pensions, from 27 euros a month to 90, and then to 98 euros starting in 2020. In exchange for these concessions, Volkswagen secured the right to ask five to ten percent of the workers covered in the agreement to temporarily increase their working hours from 35 to 40 a week.

Volkswagen representatives said they were pleased with the final agreement, which “made Volkswagen significantly more attractive as an employer” and gives the company “additional flexibility which we definitely needed.”

In offering some employees the option of more time off while also offering the employer the option of temporarily increasing hours, the deal is similar to an agreement IG Metall struck earlier this month with other manufacturing employers, affecting up to 3.9 million workers, that will give senior employees the right to cut their working week to 28 hours for a limited period of six to 24 months. Although the Volkswagen deal does not provide this kind of flexibility for employees, CNN Money cites an IG Metall spokesperson as saying this deal is actually better overall because it commits Volkswagen to making much greater pension contributions.

For Volkswagen, the deal comes amid an ongoing culture overhaul as the auto manufacturer cleans up the aftermath of the 2015 emissions cheating scandal that cost the company billions in fines and is still unfolding with investigations in Germany, the UK, and the US. From the employees’ perspective, it reflects their greater negotiating power in Germany’s tight labor market as well as the growing interest in work-life balance as a reward. Meanwhile, IG Metall and other German unions have an interest in locking in agreements regarding hours before the government pushes ahead with plans to reform labor laws, giving employers more flexibility in terms of scheduling, which unions fear will erode longstanding and cherished worker protections.