OREANDA-NEWS. Volkswagen and IG Metall brought their negotiations on the company collective agreement to a successful conclusion in Hanover on Thursday night. Base pay for employees covered by the collective agreement is to be increased in two stages – by 2.8 percent effective September 1, 2016 and 2.0 percent effective August 1, 2017. Furthermore, each employee will receive a pension building block of €200. 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.

Dr. Karlheinz Blessing, Member of the Board of Management of Volkswagen Aktiengesellschaft responsible for 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." Blessing emphasized: "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 main points of the agreement reached are as follows:

Pay increase: The base pay of employees covered by the collective agreement is to be increased in two stages. On September 1, 2016, pay is to rise by 2.8 percent. There will be a further increase of 2.0 percent on August 1, 2017. Furthermore, each employee will receive a pension building block of €200. "The pay agreement reached is based on the economic performance capabilities of the automotive industry and also offers employees a competitive improvement in income," said the chief negotiator for Volkswagen, Martin Rosik, Head of Human Resources of the Volkswagen Passenger Cars brand.

Further development of partial early retirement: From January 1, 2017, differentiated provisions will apply to partial early retirement for employees born in 1961 to 1967. "In future, we will be able to adapt our partial early retirement schemes to different groups of employees and special situations," said Rosik. The basic model is to be reduced from 7 to 6 years. For employees covered by the "Tarif plus" agreement, the duration of partial early retirement will be between 2 and 4 years. For employees with disabilities, partial early retirement with a term between 2 and 7 years will be available. In addition, terms between 2 and 8 years may be offered in special cases. Partial early retirement will only be possible by mutual agreement between the employee and the company.

Profit share calculation basis: As regards the profit share, it was agreed that it would be calculated on the basis of the two preceding fiscal years of the Volkswagen Passenger Cars brand in each case.

Term of collective agreement: The new collective agreement has a term of 20 months (June 1, 2016 to January 31, 2018). Rosik emphasized: "This means that we once again stay very close to the regional collective agreement. In future, we will therefore be able to continue the negotiation of our collective agreement in a comparable economic policy environment to our competitors."

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