VW cut wages and lengthen hours in Germany, 2005

Analysis of wage policies at VW in Germany.

Capitalists in Germany try to force workers in the Western part to accept major pay cuts and longer working hours - in a ‘downward’ adjustment to the conditions in the Eastern part.

The Opel/GM management told workers in their plants in Bochum in January 2005 that they will have to accept the same conditions as workers in the Eisenach plant (Eastern part of Germany). While the negotiations in the public sector are still going on, the workers here can also expect pay cuts and longer working hours - again a ‘downward’ adjustment to the conditions in the East.

The VW workers are now facing another form of this adjustment. They recently learned that the union IG Metall is now prepared to extend Model Auto 5000 - used in Wolfsburg (West), which has allowed the hiring of unemployed workers outside the company’s collective agreement. On January, 31st 2005, the Financial Times Deutschland reported:
The union IG Metall abandons its resistance against an expansion of the alternative employment-scheme ‘Model Auto 5000’ at Volkswagen (VW). The ‘little Touareg’ is pulled up as an example. “We are investigating whether we can adopt certain elements of the model, for example for the production of the ‘little Touareg’ at the Volkswagen plant in Wolfsburg,“ said Hartmut Meine, leader of the IG Metall Niedersachsen and Sachsen-Anhalt in Hannover. Meine gave “the flat hierarchies, the lived teamwork” as examples. At the VW plant in Wolfsburg 3500 employees produce the compact-van Touran using Model Auto 5000. Later, 1500 more are supposed to produce the Microbus based on the van T5 at VW’s commercial vehicle plant in Hannover. Unlike the other VW employees they are not paid according to their working hours, but have to fulfill production and quality targets agreed upon in advance. The needed working time can be up to 42 hours. Moreover, training periods get only paid half.

The Touran is one of the most profitable models
As a result, the Touran is one of the most profitable VW-models. Its production costs lie well above ten per cent under the costs for the Golf which is built in Wolfsburg under the VW company agreement. In Spring 2000 the Model Auto 5000 was introduced, at first against the IG Metall’s rancorous resistance. The union was concerned about a general extension of working hours, and it only agreed because under the model mainly unemployed were hired.

So far the IG Metall has always refused to expand the model, which hasn’t been imitated elsewhere so far, to other parts of the company. Now this position is softening. “The accompanying research showed clearly that employees at Auto 5000 are also only working an average of 35 hours per week” said Meine. 95 percent of the rework to be done due to lack of quality or not producing enough pieces is caused by the company not the workers, says the unionist. And according to the agreement on working hours, it is only in cases where the management is not responsible for any mistakes in the production process, that the workers are obliged to do unpaid overtime.

Questioning rigid structures
According to Meine the production of the little Touareg, an SUV (sport utility vehicle) based on VW Golf offers a good opportunity to take over parts of the Auto 5000 model. “At VW some rigid structures must be questioned.” From 2007 on the compact SUV with the plant code A-SUV is going to be built in Wolfsburg because during the bargaining procedure for a new company agreement the workforce was prepared to make big concessions. Otherwise, the car would have been produced in the Czech Republic or Slovakia. A different organization of work and more flexible working hours are supposed to lower the A-SUV’s production cost by about 1800 Euros.

After weeks of negotiations with the IG Metall, VW had signed a new company agreement in November. According to this agreement newly employed get paid about the same as the Auto 5000 workers. In exchange the 103,000 VW employees accepted more flexible working hours and lower overtime payments.

VW’s rivals in France, Japan and South Korea are using their significantly lower production costs to push their prices down, and to attract customers away from VW. In order to compete with this VW has to lower the labour costs within Germany.

Opel suffers from this problem, too. General Motor’s subsidiary in Germany announced that it would only keep its plant in Bochum open, if the production costs decline significantly.

The workforce is supposed to waive a large part of their extra pay above the level of the collective agreements. However, a guarantee for the further existance of the plant at that location is not given: “In todays world it is not possible to give guarantees any more,” said Carl-Peter Forster, Vice-president of GM Europe, talking to Opel employees on Friday. Opel currently is cutting 9500 jobs, that is every third job.

Before the last the collective bargaining round VW had also threatened to cut one third of all jobs if the labor costs in the German plants were not going to sink about 30 percent.

prol-position news #1, 3/2005