Volkswagen and IG Metall have agreed a pay deal. Base pay for employees covered by the collective agreement is to be increased in two stages, by 2.8% effective 1 September, 2016 and 2% effective 1 August, 2017. Each employee will receive a pension building block of EUR200 (US$224.5). In addition, a further development of provisions on partial early retirement has been agreed, allowing greater differentiation of partial early retirement schemes. It was also agreed that the profit share would be calculated on the basis of a two-year period in the future. The collective agreement has a term of 20 months.

Karlheinz Blessing, responsible for VW human resources, said: "The pay increase is basically equivalent to the results of collective bargaining in the metal industry. In addition, Volkswagen and the IG Metall trade union have agreed on differentiated provisions concerning partial early retirement. We will therefore be able to retain experienced personnel of considerable competence and to offer partial early retirement to a greater extent in areas where tasks will no longer be required in the future.

"The agreement reached takes into consideration the interest of employees in shaping their working life in a flexible way at the same time as increasing our flexibility. This is an essential prerequisite for improving our competitiveness."

The collective agreement applies to almost 120,000 employees at the Wolfsburg, Brunswick, Hanover, Salzgitter, Emden and Kassel plants as well as Volkswagen Financial Services.