Volkswagen and its key workers union IG Metall announced on Tuesday they had "successfully concluded" "follow-on negotiations to the 2009 collective bargaining agreement".

The 2009 agreement had included the introduction of a performance-related pay component and the hiring of apprentices based on their performance during their training period. In return, both parties had agreed to hold talks on topics such as job security. It has now been agreed to extend the undertaking on safeguarding jobs until the end of 2014 and the automaker and employee representatives affirmed their commitment to jointly achieve productivity rises, VW said in a statement.

VW's human resources chief, Horst Neumann, said: "Only successful companies can safeguard and create jobs in the long term. Competitiveness is the prerequisite for secure jobs. We have therefore made substantial progress in further developing our pay scale system by strengthening performance orientation."

He added that joint efforts to raise productivity would bring a further boost to Volkswagen’s competitiveness.

"During their annual planning process, the management and employee representatives at each location will consult on how to meet productivity targets. Joint working groups will define the steps for implementing these measures."

"The viability contract between the company and IG Metall concluded in 2006 has proved its worth," Neumann added. "The return to normal working time after the four-day week, the undertaking to safeguard jobs initially until 2011 and the associated agreements on concrete measures concerning the efficient utilisation of capacity at our plants have contributed significantly to Volkswagen’s present strength. This package of agreements systematically continues along the same path."

VW's chief negotiator, Jochen Schumm, said: "There must be a balance between performance on the one hand and expectations regarding secure jobs on the other. Today’s agreement strengthens that balance."

He added that the collective bargaining agreement also provided for a further innovation fund to foster new fields of employment close to the automotive value chain. The company and works council would be finalising the details of this fund.

The collective bargaining agreement applies to 100,000 employees at Volkswagen plants in Wolfsburg, Brunswick, Hanover, Salzgitter, Emden and Kassel, the Volkswagen Sachsen plants in Chemnitz, Zwickau and Dresden and at Volkswagen Financial Services in Germany.

An annual 1,400 apprenticeships at these sites plus the subsequent hiring of apprentices based on their performance during training are also safeguarded by the collective bargaining agreement for the period until 2014.

Union reaction amicable