Battle lines drawn ahead of Volkswagen wage talks


FRANKFURT, Aug 23 (Reuters) - The head of Germany's IG Metall union held out an olive branch to Volkswagen AG management ahead of wage talks next month, but a big gap remains between both sides' hard-line positions.

The metalworkers' union and the works council at Europe's largest automaker have demanded a 4-percent pay rise and job guarantees for the 103,000 staff in VW's six western German plants covered by the in-house contract.

A company source told Reuters on Saturday that VW would insist on a pay freeze of at least one year to help it towards its target of cutting labour costs by 30 percent by 2011.

In an interview with the Handelsblatt newspaper, IG Metall chief Juergen Peters said the negotiations did not have to escalate into a test of wills that would trigger a strike.

"It is not a new experience for us that management does not fulfil our demands at the drop of a hat. The question of a labour battle is really hypothetical at this point. I hope that we can reach a solution amicably," he said in remarks published on Monday.

He also rejected suggestions that the union and the company's works council were split on strategy, the former focused on pay rises and the latter on job security.

"There is a discussion over priorities but it is undisputed that higher wages and salaries should be the central subject," he said, adding that labour officials also intend to discuss how to preserve the roughly 170,000 jobs VW offers overall in Germany.

Hartmut Meine, who heads IG Metall's negotiating team in VW's home state of Lower Saxony, said it was unfair to make staff bear the brunt of the efficiency drive at VW.

"If it came to a pay freeze, it would basically mean an announcement that shareholders also get nothing," he told German television. "Shareholders get a regular dividend, so why should the workers get nothing?"

Volkswagen has declined to comment ahead of a news conference at 0930 GMT to detail its negotiating stance. Its personnel chief Peter Hartz has made clear he wants more flexibility from the workforce to boost competitiveness.

VW's staff earn around a fifth more than other German metalworkers, something Volkswagen wants to reduce at a time of sluggish growth, excess capacity and price pressure.

The VW negotiations are being closely watched as a gauge of German workers' willingness to make concessions that would boost the competitiveness of Europe's biggest economy, perhaps by agreeing to extend the work week to 40 hours without extra pay.

Most VW workers log between 28.8 and 40 hours a week now, depending on the production cycle, putting longer hours in "labour accounts" they can draw on when slack times arrive.

The magazine Der Spiegel reported that VW management wants to be able to cut pay by up to 30 percent if the group is losing money and let plants vie for production by pledging staff will work a limited amount of unpaid overtime for years if needed.



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