Volkswagen reaches wage deal with German union By Reuters

© Reuters. FILE PHOTO: The logo of German carmaker Volkswagen is seen on a rim cap in a showroom of a Volkswagen car dealer in Brussels, Belgium July 9, 2020. REUTERS/Francois Lenoir

By Jan Schwartz

HAMBURG (Reuters) -Metalworking union IG Metall said it had struck a wage deal with Volkswagen (ETR:) for the carmaker’s western German factories after 11 hours of negotiations overnight, giving around 125,000 workers 8.5% more pay.

The deal would have been considered exceptionally generous until recently but is now below inflation, which was 11.6% last month in Germany, Europe’s largest economy.

Under the two-year deal, workers will receive a 5.2% wage hike from June 2023 and another 3.3% from May 2024, as well as a lump-sum payment worth 3,000 euros ($3,093) after tax to help offset soaring inflation.

“In combination with political relief measures such as the electricity and gas price brakes as well as further one-off payments from the state, the result is an overall package that curbs the impact of inflation,” IG Metall negotiator Thorsten Groeger said in a statement.

IG Metall, which is Germany’s largest trade union, had initially demanded an 8% wage increase over 12 months for the workers at six German VW plants as well as at subsidiaries including Financial Services.

The agreement at Volkswagen is similar to an earlier agreement for the wider metal engineering industry in Europe’s biggest economy.

IG Metall this month agreed a below-inflation pay hike that set the benchmark for 3.9 million metal and electrical sector workers across Germany, in a deal that pointed to containable wage pressures in the broader euro zone.

The union said it would hold a news conference at 0800 GMT in the northern city of Hanover to provide further details on the VW deal.

($1 = 0.9697 euros)

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