Economy and Social Matters

A year and a half ago Volkswagen AG and the German metalworkers union agreed on a novel recruitment scheme: to take on 5,000 unemployed workers by the year 2006 at a monthly wage of DM 5,000 (ie €2,556). To date the carmaker in Wolfsburg has already put 3,000 people to work. Various ingredients of the scheme could catch on.

It was a hot summer in 2001 in the Lower Saxon auto town. IG Metall, Germany’s metalworkers union, was bargaining hard with VW personnel director Peter Hartz and his team for a new collective agreement. For a long time it looked as though the "5,000 x 5,000" project was doomed to be stillborn: the union was adamantly blockading the plan to hire 5,000 new staff from amongst the ranks of the jobless at DM 5,000 a month. But at the end of the day both sides sat down to sign the deal.

In the first round of recruitment the Volkswagen subsidiary Auto 5000 GmbH is going to create 3,500 jobs. Some 3,000 people have been hired to date, the remaining 500 are slated for the next few months. They include young and old, and only a third of them have any training in the metal or electrical industry. All of them will be involved in making the new Touran minivan at the VW works in Wolfsburg.

Two-fifths of the new recruits are still honing their basic skills at the labour office’s expense. Roughly half the Auto 5000 employees have already qualified for advanced training in the specific requirements of the automotive industry. And 259 have now made it through both of those stages to reach their objective: a permanent job in assembly. A second round of recruitment will begin in 2005 for another 1,500 VW personnel, who will be assembling a minivan in Hanover.

As against the 4.5 million plus unemployed in Germany, 5,000 new jobs seems but a drop in the bucket. But the collective agreement contains a number of innovative and exemplary elements, viz.:

Training. The object of the scheme is to employ only jobless persons. So in the first stage of the process the candidates get three months’ training courtesy of the labour office, during which period they continue to receive their unemployment benefits as before. Then they are taken on by Auto 5000 GmbH for a six-month probationary period. First the new staff receive a special job familiarization contract, under which they gross €2,045 per month. Barring any professional or personal impediments, they are then employed on a permanent basis and their monthly wages raised to €2,556.
Working hours. With regard to labour deployment Auto 5000 GmbH has a great deal more latitude than parent company Volkswagen under its house agreement or other companies under the industry-wide agreement. To be sure, its working week is only 35 hours as throughout the metal industry in Lower Saxony. But each Auto 5000 employee is required to devote another three hours to training programmes. And when demand for the VW vehicles is particularly brisk, the workweek can be extended to up to 42 hours. Saturday counts as a regular workday – ie no overtime premium. However, the extra hours worked are credited to a time account that can hold up to a total of 200 hours and has to be "balanced" within 15 months. If it can’t be due to the level of incoming orders, the overtime is paid at a premium.
"Incentive wages". Last but not least Volkswagen AG has succeeded with its 5,000 x 5,000 plan in instituting a new system of remuneration. The workers are no longer paid simply for clocking in, but for achieving output targets. If they fail to produce the set quantity of flawless autos in the time allowed, they have to work unpaid overtime. But if they work faster than planned, they’re up for bonus payments.

The deal between VW and labour to train and employ jobless workers in exchange for concessions in the way of flexibility is particularly well suited to the routine work involved in the final assembly of motor vehicles. But this model cannot be indiscriminately applied elsewhere. In many areas of the metal and electrical industries that go beyond assembly – eg mechanical engineering – skilled workers still need to learn the ropes the long way: through comprehensive training.

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