GM’s European Opel unit is claiming that a pay deal with its workers will save the company ‘tens of millions of euros’ over the next three and a half years.

Details have now emerged of the agreement reached between the company and its works council struck earlier this week. Under the terms of the agreement, workers receive a 3.1% wage increase effective retroactively to June 1. They will get a further 2.6% increase from June 1, 2003. This year’s rise is less than the 4% increase for the engineering sector achieved by the IG Metall engineering union.

The deal also ensures that there will be no compulsory redundancies until 2005.

“Opel has already made important steps to overcome the difficult economic situation,” Opel Chief Executive Carl-Peter Forster said in a statement.

“Our programme has the trust of our workers who are ready to give their contribution to the success of the turnaround plan,” he added.

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Opel has announced that it plans to reduce its workforce by around 2,500 this year to 34,500 employees via early retirement, voluntary redundancy and natural wastage.

GM’s ‘Project Olympia’ cost-cutting plan hopes to cut excess capacity in Europe by 500,000 units a year and save two billion euros ($US 1.8 billion). Project Olympia is also intended to return GM’s loss-making European operations to profit – but a loss is still expected for 2002.