Fair pay, an appropriate share in the Company’s success, and co-determination rights for employee representatives underpin the motivation, performance and participation of our employees. Employee participation makes the Volkswagen Group more competitive and helps secure jobs, so we engage in dialog with our employees to set standards for good work. Pay, participation and co-determination are also key factors in our efforts to be an employer of first choice.
Fair Pay Anchored in the Social Charter
In line with our Social Charter, all remuneration and benefits for a normal working week should be at least in line with the legally enforceable minimum under collective agreement, and should ensure that our employees and their families have an appropriate standard of living. When setting collectively agreed pay, the employer and trade unions ensure that starting pay is in line with local minimum rates of pay. We make no distinction between female and male employees: our principle is that our employees are recruited, employed and promoted solely on the basis of their skills and expertise.
Recognizing Performance and Sharing Profits
The systematic fostering and recognition of good performance is a vital element in our personnel management strategy, along with redesigning our systems of remuneration to ensure that employees have a sustainable share in the success and profits of the Company. Since 2010, Volkswagen AG has had detailed standard criteria for skills development and performance assessment. These criteria cover the entire workforce, from apprentices to top managers, and are underpinned by concrete incentive systems within the pay structure.
Volkswagen AG employees covered by collective agreement are paid under a three-tier pay system:
- basic pay in the form of a competitive monthly salary
- a performance-related component, which rewards individual performance
- an entitlement to profit-sharing, which is laid down by collective agreement.
This three-tier pay system is a tried and tested way of ensuring that Volkswagen AG employees share in our success. It also enables us to recognize individual performance and maintain competitiveness. The three-tier pay system is increasingly being rolled out across the Group, including at Audi and ŠKODA, at the Volkswagen Group Rus plant at Kaluga and at Volkswagen de México.
Volkswagen aims to promote high levels of technical expertise and a strong team spirit among its employees. The Company invests in its people, promotes a good working environment and offers employees attractive opportunities for development. This includes acknowledging employees’ opinions, assessments and constructive criticism. One tool we use for this purpose is the Employee Opinion Survey, through which employees can actively help shape the Company. With this standardized Group-wide employee survey, we regularly gather information about employee satisfaction. To enable us to fundamentally redesign the Employee Opinion Survey, we suspended Group-wide implementation of the tool in early 2015. In the future, change processes resulting from the Survey will be implemented even more sustainably. This meant that in 2015, our focus was on implementing the actions identified in the 2014 Employee Opinion Survey.
We also rely on our employees’ participation in making ongoing improvements to our production system. On the basis of Company agreements, the “Volkswagen Way” has been a successful tool for involving Volkswagen AG’s workforce in improving the Company’s efficiency since 2007. By using it, we aim both to increase competitiveness and to safeguard employment. The tool involves a range of instruments and methods designed to continuously improve processes and structures in the areas of productivity, quality, ergonomics, leadership and teamwork. In the 2015 fiscal year, the “Volkswagen Way” again placed a particular focus on optimizing workflows. To this end, projects were initiated and implemented across all business areas. One example is the standardization and automatic generation of correspondence for the human resources department using the ESCRIBA application.
Under the “Ideas Management” program, our employees use their creativity, knowledge and initiative to improve both processes and products. Since 1949, employees in Germany have submitted more than 2.1 million ideas using the former suggestion scheme and today’s program, saving around €3.3 billion at Volkswagen AG sites in Germany and at Volkswagen Sachsen GmbH. Ideas Management is an important leadership and motivational tool for line managers. It also contributes to improving health and safety in the Volkswagen workplace and helps us reach our targets for reducing energy and water consumption, waste, VOCs and CO2 emissions.
Ideas Management in the Volkswagen Group*
|*41 participating production sites – as at December 31, 2015.|
Collective Agreements and Strikes
A total of 12 collective agreements were concluded at international Passenger Cars production plants in 2015. Strikes lasting several days were held at Volkswagen do Brasil’s Anchieta and Taubaté plants during negotiations on a restructuring program. Group sites in Belgium, Italy and Spain were affected by politically motivated strikes. At Volkswagen Navarra, for example, there was a 24-hour stoppage as part of the national Occupational Safety Day. A regional strike against planned government labor market reforms triggered a one-day strike at Lamborghini and Ducati. A further one-day strike took place at Audi in Brussels against planned government action.
Flexibility and Employment Security
Volkswagen Group sites around the world use a wide range of flexibility tools to help protect jobs. These tools enable us to take action in three areas – working time flexibility, employee flexibility and fluctuations in the volume of work – to respond to changes in the economic environment in both the short and the long term.
In sectors that, like the automotive industry, are heavily dependent on economic trends, employment flexibility is also crucial. We use our flexibility tools to cascade change down the hierarchy, supplementing them where necessary at the site with additional tools agreed with employee representatives. Where we have exhausted the scope for flexibility within an individual site, we consider cross-site options, such as employee mobility within the Group or ways of influencing the volume of work through in-sourcing, out-sourcing or cross-site hubs.
At Volkswagen Navarra in Pamplona, an early retirement program was finalized during the reporting year to complement existing employee flexibility measures. Other measures to increase flexibility include qualification programs to protect employment at Volkswagen Autoeuropa in Setúbal, from which more than 100 employees were able to benefit in 2014 and 2015. The programs were run by the Advanced Technical Education Center (ATEC) training academy, with support from the state. The scheme enabled production employees, for example, to train as team leaders or group leaders. Further qualification programs were also available, for example through the Lean Center. An ongoing employee flexibility measure for protecting jobs at Volkswagen Autoeuropa is the deployment of more than 200 Volkswagen Autoeuropa employees (on average) at Group sites around the world.
Working time flexibility was agreed as part of collective bargaining at the Volkswagen Group Rus plant in Kaluga. Since October 2015, each employee has had a “flexibility account” that enables them to build up a deficit of up to 98 hours in their contractual hours of work. Agreement was also reached on up to four days’ plant closure a year. If the plant is closed for more than four days, employees receive two thirds of their contractual pay per shift lost.
Under the job protection program in Brazil, and in close consultation with the trade union, the Anchieta plant reduced employees’ working time by around 20% to a four-day week, starting in October 2015. The state is making up part of the lost earnings.
Overall, the wide range of flexibility tools within the Volkswagen Group helps maintain competitiveness and protect jobs. Under the collective agreement on sustainable site retention and employment security, all Volkswagen AG employees enjoy employment security.
Employing Former Apprentices
Volkswagen AG is bound by a collective agreement that provides for all apprentices to be employed upon completion of their training. Their performance determines whether they are offered temporary or permanent positions. In accordance with the works agreement governing the performance-related employment of trainees, apprentices must fulfil specific performance criteria in order to be offered permanent employment with the Company.
Participation and Co-Determination
The Volkswagen Group has an internationally recognized culture of employee participation. In many sites, employees are represented in two ways: by their trade union and by a company representative body (e.g. a works council). Many Group companies also have supervisory bodies on which employees are represented. The International Charter on Labour Relations enables employee representatives around the world to negotiate local agreements on specific rights to information, consultation and co-determination. This well-developed system of participation within the Volkswagen Group has proved successful over many years. When substantial changes are being planned in the Company, employee representatives are involved in the process from an early stage, ensuring that processes of change are tackled jointly and supported by all employees.
International Employee Representation Structures
We are constantly adapting our structures for international employee representation to evolutionary changes within the Volkswagen Group. The number of members of the Group Global Works Council (GGWC) has steadily grown since it was first created in 1999; 94 employee representatives currently attend the annual GGWC meeting. The Group European Works Council (GEWC) has also expanded since it was created in 1990 and currently has 73 members. Members of both bodies meet jointly once a year. As well as considering and discussing reports from Group sites, the meeting also holds discussions with HR and management representatives in a joint briefing and consultation on future product and staffing plans, and on labor law and employment standards.
Joint Meeting of Group European and Global Works Councils
The annual joint GEWC and GGWC meeting held in Wolfsburg in October 2015 brought together 229 employee and human resources representatives from 83 sites in 24 countries. Representatives of the trade unions at sites in Russia and China once again attended as guests. Simultaneous interpretation into 13 languages is now provided at these meetings. This ensures that all members are fully informed on proceedings and can participate in their own language.
The GEWC and GGWC also held three executive committee meetings in 2015 that were attended by all brands and all regions, including Porsche Holding Salzburg and Volkswagen Financial Services AG.
The five GEWC and GGWC sub-committees that consider differing areas of the Company (sales and financial services companies; commercial vehicles; mechanical engineering; Audi; and the Liaison and Coordinating Committee for China) also met at regular intervals. These committees meet at least once a year, both as an employee representation group and with Company representatives.
Sales and Financial Services Committee
The annual meeting of the Sales and Financial Services Committee held in Braunschweig in May 2015 brought together 50 representatives of 30 sites across 11 countries. At meetings of this Committee, participants are briefed on the current status of individual Group companies with respect to implementing the International Charter on Labour Relations and the Charter on Temporary Work, as well as providing health-related programs.
Commercial Vehicles Committee
The Commercial Vehicles Committee, which brings together employee representatives from the MAN, Scania and Volkswagen Commercial Vehicles brands, met three times in 2015 to discuss future collaboration. The Committee has rights of co-determination on synergy projects with an impact on employment levels. In September 2015, employee representatives voted on specific projects for the first time, including implementation of central production of non-driven axles at the Salzgitter plant and central gearbox production at the Södertälje site in Sweden. The expansion of the Commercial Vehicles holding company and associated enlargement of its Supervisory Board were also key issues in which the Committee took a keen interest.
Liaison and Coordinating Committee (China)
The Liaison and Coordinating Committee for China was set up in 2008 to improve the situation of workers, working conditions, participation rights and job security in the Group’s Chinese joint ventures. In particular, it serves as a platform for ongoing dialog with employee representatives in China. The Committee normally meets twice a year. In 2015, its main priority was the Charter on Temporary Work, as well as Chinese legislation governing temporary work.
International Agreements between the Global Group Works Council and Group Management
Agreements between the Global Group Works Council and Volkswagen Group management apply to all companies represented on the Global Group Works Council. The culture of international co-determination is now largely determined by a number of Group-level Charters:
- The Declaration on Social Rights and Industrial Relations at Volkswagen (the Volkswagen Social Charter) (concluded in 2002 and amended in 2012)
- The Charter on Labour Relations (concluded in 2009)
- The Charter on Temporary Work (concluded in 2012)
- The Charter on Vocational Education and Training (concluded in 2015)
In most cases, these Charters provide a framework for local implementation.
Charter on Labour Relations
The Charter on Labour Relations provides a framework for the responsible development of local labor relations, with a focus on cooperative approaches to resolving conflict. It is underpinned by the interaction between employee representatives’ rights to participation on the one hand and their willingness to take joint responsibility and to optimize their performance on the other. The Charter sets out rights to participation (information, consultation or co-determination) in employment, personnel and business issues. Employee representatives and companies use the Charter as the basis for agreeing local implementation. 2015 saw a number of implementation activities and workshops within the Volkswagen Group, especially within the ŠKODA and Bugatti brands in the Passenger Cars Division, at Volkswagen do Brasil and at Volkswagen Group Rus. For the first time, there was also a company-specific introductory workshop for employee representatives at Bentley.
In early 2015, the plant in Steyr, Austria became the first within the MAN Group to conclude a local agreement implementing the Charter on Labour Relations. The agreement gives the works council clearly defined rights to co-determination when staffing decisions are made and increases employee involvement in business and economic decisions. In the future, there will be four works meetings a year rather than one, as at present.
The Charter on Labour Relations was also signed at the MAN Türkiye A.Ş. plant in Ankara with the aim of establishing a basis for cooperation in areas such as setting up a body to represent employees’ interests and holding regular works meetings.
Charter on Temporary Work
The Charter on Temporary Work sets out the principles governing the use of temporary work across the Group, including a benchmark for the ratio of temporary external personnel to core workforce, provisions on equal pay, equal treatment and qualification programs for temporary workers, and an upper limit of 36 months on temporary work assignments with the option to move to a permanent contract after that time. The Charter on Temporary Work also forms the basis for local arrangements at the various Group sites. It further develops existing agreements and commitments. Implementation of the standards it lays down in relation to the use of temporary work across the Volkswagen Group reflects country-specific trade union traditions and national statutory and collective bargaining provisions. Individual issues arising from implementation of the Charter on Temporary Work, such as questions of definition or interpretation, are tackled, analyzed and resolved in line with the spirit of the Charter in forums such as workshops. A range of activities and workshops took place in 2015, for example at ŠKODA AUTO, Bentley and Scania.
At Scania, for example, the company and the trade unions defined central pillars for implementation of the Charter on Temporary Work for direct employees. The phased agreement provides, among other things, for the production area to employ no more than 10% of its workforce on a temporary basis and for the decision on employing temporary external personnel on a permanent basis to be made after just two years.
Volkswagen AG contributes to the benefits provided by social insurance schemes, such as sick pay, and supports dependents when an employee dies. The Company also has a collective accident insurance policy that covers all employees against accidents resulting in death or invalidity. In exceptional cases of economic hardship, Volkswagen AG grants employees a short-term loan.
Employees of Group companies in Germany and around the world also enjoy further company benefits: these may include subsidized transport and meals, low-cost accommodation, monthly childcare allowances, and discounts on selected leisure activities. Depending on location, additional healthcare or supplementary pension benefits round off the range of company benefits.
Volkswagen AG, all its brands and all its subsidiaries run company pension plans to ensure that former employees have a source of income in retirement. In addition to employer contributions, employees can convert part of their pre-tax salary into pension contributions.
They can also make direct contributions to their own pension provision by converting a further proportion of their salary into pension contributions.
Volkswagen AG’s Time Asset Bond is a scheme to reduce the length of an employee’s working life. Since 1998, the Bond has offered employees a chance to contribute to it out of their gross pay and their working time credits. The time assets accumulated can then be used to enable employees to take paid time off in the run-up to retirement.