Volkswagen AG has approved an increase in the wages of its German based workers following a an agreement with labor activists who said employees would not be the ones to cover the costs of its significant debts arising from the emissions scandal.
According to a statement released by the German carmaker on Friday, wages are expected to go up by 2.8 percent in September, followed by a similar increment in August 2017 as stipulated in newly entered into negotiations with the IG Metall union. VW is expected to pay an extra $225 on each employee’s current pension contribution.
In a statement, the head of personnel at VW, Karlheinz Blessing, said that the consensus reached caters for the employees’ concerns with regards to molding their careers in a way that is adaptable while enhancing the company’s flexibility as well, terming it as a precondition if they wish to enhance their competitive advantage.
The agreement matches the 5 percent increment initially demanded by the union at the beginning of the discussions emphasizing the depth of authority employees and unions have at Volkswagen. The carmakers’ supervisory board is said to be dominated by labor officials who are capable of obstructing vital decisions.
The German carmaker last week gave its German employees a total of 3,950 Euros as a share of profits notwithstanding the operational deficit they incurred in the last concluded year originating from the price paid due to the emissions-manipulation scandal. VW announced on Friday that profit-sharing under the new pact will be calculated on a biannual basis.
The agreement affects 120,000 workers stationed at main Volkswagen’s factories located in the western part of Germany and the core plant in Wolfsburg.
The German carmaker has allocated16.2 billion Euros to cater for expenses arising from fixing diesel engines in an estimated 11 million cars globally which were assembled with false emission figures and test results. Attempts to fix about 8.5 million cars in Europe are still dragging on along negotiations that are still ongoing at a snail pace as to whether to purchase back around 500,000 cars in America or make them compliant.
Last year saw the carmaker make an operating loss of 4.07 billion euros, marking its very first loss ever since 1993. Excluding the proceeds from two Chinese based ventures, which are excluded from operating profit, the company would have posted its largest net loss ever registered since it was established.