France’s PSA Group and Spanish trade unions have signed a deal which includes a voluntary redundancy package for 900 Madrid factory workers.

The collective bargaining agreement spans three years and allows for the 900 redundancies to be offset by the creation of 100 new jobs each year until 2003.

The 3,800 jobs at the Madrid factory will be reduced by 600 over the next three years.

From May, a third shift will also be axed but PSA may reinstate it next year.

The agreement also allows for a three per cent wage increase; one percent above the expected inflation rate.

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