New VW Van At Center of Controversial Wage Plan
January 14, 2003
German carmaker Volkswagen on Monday introduced its new minivan Touran at its Wolfsburg headquarters. It’s the first VW vehicle produced by workers participating in an innovative new wage model that is meant to create 5,000 new jobs in Germany. With some of highest labor costs in Europe, German companies like Volkswagen have increasingly hired workers in countries with lower costs.
With a rapid dwindling of manufacturing jobs in Germany, VW started looking for a way to respond to the effects of globalization three years ago. Over the past 10 years, Volkswagen cut one-quarter of the manufacturing jobs at its northern German Wolfsburg factory. At the same time, VW factories were established abroad, mainly in Eastern Europe, creating 80,000 jobs outside Germany.
Protests for jobs
When VW considered building a new plant abroad to build the Touran minivan both workers’ representatives and the firm’s influential shareholder, the German state of Lower Saxony, protested.
VW personnel chief Peter Hartz (photo) then came up with the idea of recruiting unemployed automobile workers and paying them on the basis of meeting production targets for high-quality work in response to market demand. The workers would be required to undergo regular training to deal with changing needs.
Though they initially supported it, union leaders soured on the plan, partly because they saw it as a threat to fixed working hours.
When negotiations broke down between Peter Hartz and workers’ representative Klaus Volkert in June 2000, Chancellor Gerhard Schröder personally stepped in to encourage the two sides to find a solution.
A victory for the car manufacturer allowed the pilot project to start for a period of 3.5 years beginning in October 2002.
An innovative plan
Hartz’s scheme sets the monthly salary at €2,535 ($2,675). Although not a bad wage, it is around 20 percent less than a worker with a normal VW contract earns. Employees are required to work more flexible hours than the norm, and they are not only paid based on hours worked, but also according to their ability to reach production targets. If a production team makes a mistake or fails to fulfill its guidelines, the team has to work overtime.
"I have to see to it that everything runs smoothly in my area," one employee explained to DW-RADIO. "When I make a mistake, the next work station is disrupted. He has to wait and can’t continue working. One work station depends on the next. You have to be able to rely on your colleagues."
Creation of the new positions in German also required some tough compromises for workers. The new wage model doesn’t allow for bonuses for working on Saturday or for Christmas or vacations, all of which are still the norm in Germany. But VW does provide bonuses for teams that reach their targets.
Second-class jobs
Trade union functionaries and "normal" VW employees are concerned about the effects of second-class jobs.
"I don’t know if it’s so great that 5,000 people get work under these conditions the way VW envisages," an employee told DW-RADIO. "The working hours are extremely long. They expect very great efforts from people that isn’t expected from those working next to them."
Volkswagen CEO Bernd Pischetsrieder views the wage model as an important contribution to Germany industry’s ability to compete. "Creating jobs in industry in Germany is crucially linked to what we can do better here than in other countries: better training, better infrastructure, better networking in the systems, in people cooperating and also in the social partnership," he says.
Peter Hartz announced on Monday that of the 35,000 people who had applied for the new jobs, 2,510 had been hired. Another 3,500 are to be hired by May, he said.
Hartz, who was recruited last year by Chancellor Schröder to propose reforms aimed at slashing high unemployment in Germany, is convinced that his model will pay off. He hopes that "it will set a precedent and that we never have to produce a car outside of Germany -- unless it’s for market reasons."
VW intends to produce 200,000 Tourans in Wolfsburg over the next three years. The six-gear minivans will cost around €20,000.