After two and a half long days of talks, Volkswagen and its IG Metall workers' union have finally reached agreement.

According to a VW statement, the central element is a new standard working time of up to 34 hours a week without more pay. In addition, a new profit-sharing model for the workforce has been developed. Production volumes for each of the plants have also been determined, safeguarding capacity utilisation and thus jobs.

As a result, Wolfsburg remains the key production facility for the Golf.

The member of the board of management of Volkswagen responsible for human resources, Horst Neumann, said: "The milestones we have agreed today mark a major step forward in restructuring at Volkswagen. Negotiations were very tough. But they were characterised by the joint resolve to make headway as regards the competitiveness of Volkswagen.

"Competitiveness is the prerequisite for jobs, and we have achieved this with a return to normal working hours."

Klaus Dierkes, VW's chief negotiator and head of human resources for Germany, added: "We have brought labour costs and working time into line with the level for our industry and made sure our workforce does not lose money."

The key point of agreement are:

  • The standard working time is to be increased to 33 hours a week for production employees and 34 hours a week for administrative employees. This will not result in an increase in pay. This working time can be raised to 35 hours by adding a further two hours, or one hour respectively, with extra pay.
  • A working time 'corridor' of between 25 and 33 hours for production employees and 26 to 34 hours for other employees was also agreed. Regardless of actual working time, pay within this 'corridor' corresponds to the previous pay level for a 28.8-hour week. Neumann noted: "With this wide working time 'corridor' we can respond better to market fluctuations without any major changes in labour costs. That guarantees us very good flexibility and simultaneously offers the potential for high cost savings."
  • Product commitments and production volumes were agreed for the six traditional plants governed by the company wage agreement. Neumann said: "Now that we have brought working time into line with the level for our industry, many of the production volumes at the traditional sites again make economic sense. This improved competitiveness allows higher capacity utilisation."
  • Employee profit sharing bonuses when the business performs well could be noticeably higher than at present. According to Neumann: "The principle for performance-related remuneration is simple: employees who show commitment and produce good work must be rewarded. Profit sharing strengthens employees' awareness of their own performance and of their brand, but does not unduly burden the company's performance when times are difficult."
  • Volkswagen will make a one-off payment to the company pension fund of EUR6,279 for each employee. Neumann said: "Making provision for old age is becoming increasingly important. As a company, we want to do justice to this responsibility."
  • An increase in remuneration in line with the level for the industry was agreed for employees already paid on the basis of the competitive pay scales (Volkswagen's "company pay agreement II".)
  • Volkswagen will continue with the present level of apprenticeship training. Neumann said: "Even when times are difficult, we will continue to invest in the future."

Other items include a binding commitment for both parties to negotiate on adopting elements of the collective agreement applicable for the Volkswagen subsidiary Auto 5000.

The collective bargaining parties agreed to finalise the details of these agreements in a final round of negotiations scheduled for Wednesday, 4 October.

The planned term of the agreement is 1 January, 2007 until the end of 2011.