[HANOVER, Germany] Volkswagen and Germany's powerful IG Metall labour union agreed a 4.8 per cent pay increase for around 120,000 workers at the carmaker's western German plants.
Germany's IG Metall union had sought a 5 per cent pay rise over 12 months for the workers at VW, which last month reported a 4.1 billion euro (S$7.18 billion) operating loss for 2015 due to the costs of an emissions test-rigging scandal.
Under a collective wage-bargaining deal struck early on Friday, VW salaries will rise by 2.8 per cent on Sept 1, 2016, and by a further 2 per cent on Aug 1, 2017.
Employees will also receive a 200 euros pension contribution. The new wage agreement runs until Jan 31, 2018.
Part of the deal is also an extended part-time working scheme, which allows VW to cut the number of shifts worked by certain age groups of workers until 2022 in the event of a downturn.
The union, Germany's biggest, is a trend-setter in national wage bargaining and represents employees at all of Germany's major carmakers as well as in manufacturing, industrial production and steelmaking. This month it won a 4.8 per cent raise over 21 months for 3.8 million German workers.