VW Labor Talks Hit Snag

by Edward Niedermeyer

Published: January 31st, 2011

With the UAW entering contract negotiations this year, all eyes are on Volkswagen’s discussion with its largest union IG Metall… and the signs coming from those European labor talks aren’t looking promising. Automotive News [sub] reports that VW has offered IG-represented workers a 2.9 percent pay raise over the next two years and a €300 one-time payment by June, but with VW raking in billions in profits this year, the workers aren’t biting. IG Metall chief negotiator Hartmut Meine tells Automotive News [sub]

The difference between demand and offer is much too big. The length of the deal has to be shorter and the proposed pay hike higher, before we can talk about a compromise

IG Metall is asking for a 6% pay increase over the next 12 months. But VW’s increased manufacturing footprint in China and the US, and competition in Europe from Eastern European manufacturing plants hurts the union’s chances of getting what they’re looking for. VW negotiator Jochen Schumm shoots back“The wage gap east of our domestic borders and new competitors from the Far East force us to be measured in all permanent increases in costs,” Schumm said, adding that VW already pays its workers 10 percent of the brand’s operating profits as a performance bonus.We know that the UAW’s negotiations with Ford will be interesting this year, as that firm’s giant profits are weighed against the union’s recent concessions. And, as VW’s negotiations with IG Metall are proving, the gap between unions and management is already plenty wide. After several years of industry contraction, 2011 will be the year in which unions battle management for a new partnership in the industry’s “new normal.”