Lower Saxony state premier Christian Wulff reportedly expects Volkswagen to clinch within weeks a deal with its workforce that could boost efficiency and preserve jobs.

"I am very optimistic that agreements will be reached in September or October that secure employment and Volkswagen's profit expectations," Wulff, whose state is VW's second-biggest shareholder after Porsche, told Reuters in a Tuesday interview.

"Those are the two goals to which the state government sees itself especially committed," he added.

Wulff said VW's host state thinks chief executive Bernd Pischetsrieder, VW brand chief Wolfgang Bernhard and works council head Bernd Osterloh were well on the way to making quality cars at affordable prices to support those twin goals.

VW has said 20,000 jobs in Germany are at risk unless it can cut its labour costs, which are the highest in the global car industry, Reuters noted. It has proposed extending its working week in western Germany to 35 hours, from 28.8 now, at no extra pay.

Labour leaders have ruled this out, and Pischetsrieder has said he could not predict how the divide could be bridged.

Wulff, who sits on Volkswagen's supervisory board, told Reuters he did not think Volkswagen chairman Ferdinand Piech would remain on the board beyond the 2007 annual meeting.

"Ferdinand Piech's term of office ends in spring 2007. I do not expect him to allow his name to be presented to the annual meeting (for re-election) as a regular member of the supervisory board," he said.

At a stormy annual meeting in May, Piech would not tell shareholders when he planned to step down from the board, Reuters noted. Piech, a former VW chief executive, has faced investor accusations that he repeatedly undermined management's authority by siding with labour to secure his continued influence at the cost of pushing through needed reforms at VW.

Wulff, a bitter rival of Piech, has also raised questions about a possible conflict of interests for the VW chairman, whose family controls Porsche, the news agency added.

Under a deal struck in January, Piech agreed to step down as chairman next year and be replaced by a neutral third party with ties to neither VW nor Porsche. But speculation has flared that he could try to remain on the board as a regular member.

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