Volkswagen AG has failed to reach agreement with unions representing its 90,000-strong German workforce who are seeking a 4.2% wage increase.

Talks in Hanover broke down yesterday and will not now resume until 17 September. The previous agreement expired at the end of July. In addition to increased wages, union leaders are seeking better conditions for part-time work for older employees.

Volkswagen proposed a performance-related bonus for workers during the first round of negotiations on 20 August. At the time, the company said it would approach the contract talks with a “watchful eye on the difficult 2010 year.”