FRANKFURT, Aug 23 (AFP) - Volkswagen, Europe`s leading car maker, said Monday it planned to freeze the wages of its 100,000-plus employees in Germany and increase flexibility of working hours in the upcoming round of pay talks.
"There is no room for increases in income," VW`s human resources chief Peter Hartz told a news conference at the presentation of management demands with regard to the upcoming wage negotiations scheduled to begin in mid-September.
"We cannot close our eyes to the worldwide competitive situation ... The European automotive market above all is discouraging. In Germany, in particular, after three years of stagnation, there are still no signs of a recovery," Hartz said.
"If we want to continue existing and secure our jobs in Germany, VW needs to have a significantly better cost structure. This is also true for labour costs, which must be cut by 30 percent by 2011," Hartz said.
The powerful IG Metall labour union last week said it was demanding wage increases of four percent and job guarantees for the next 10 years.
Not only were employees being asked to forego wage increases, VW, whose profits are falling sharply in the face of slack demand, also wants around 30 percent of pay to be performance related.
And the car maker also wants increased flexibility of working hours, introducing an annual account of working hours which would enable the company to boost the number of hours worked if and when the situation required.
In addition, overtime would be paid only if employees worked more than 40 hours a week rather than 35 hours at present.
At the same time, management hoped to cut paid breaks and training periods.
And as an efficiency-boosting incentive, VW wanted to introduce an "internal tender system" to allow German plants to compete among themselves for the production of new car models.
Wage negotiations at VW are scheduled to begin in mid-September and a number of officials of the powerful labour union IG Metall said last week the talks were likely to prove difficult and could even lead to an all-out labour conflict.
In a newspaper interview published Monday, IG Metall chief Juergen Peters insisted he believed an agreement could be reached peacefully.
Asked by the business daily Handelsblatt whether demands by VW management for a zero wage round would likely spark a labour conflict, Peters replied: "The question of a labour conflict remains purely hypothetical at this stage. I hope we`ll be able to reach a solution peacefully."
Asked whether IG Metall would be willing to accept zero wage increases, Peters said: "I`m not going to negotiate here publicly. But if an opportunity in this direction arises, we will discuss which concessions could be made to us in return."