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Skoda Auto agrees to wage deal with unions

From Automotive News | April 19,2007

Management at Skoda Auto, a unit of Volkswagen AG, reached a wage deal with unions that will avert a renewed strike at the Czech Republic's biggest firm, Skoda human resources chief Martin Jahn said today.

Skoda workers walked out for several hours on Tuesday, April 17, cutting the daily production of 2,500 cars by about a third, and had threatened to strike again on Thursday, April 19, if there was no deal.

There have been very few strikes in the Czech Republic in recent years and unions at a number of other firms were watching Skoda to see whether the union could press employers for a larger share of profits in the fast expanding economy.

Skoda agreed, in a deal valid until to end of 2008, that wage tariffs would rise by 10 percent immediately, but overall wages including various benefits would grow by 12.7 percent in the period.

"We consider this compromise to be very good, we believe it will bring solid remuneration to our employees while allowing the company to expand further in the Czech Republic," Jahn told a news conference shown live on the public Czech Television.

Skoda had earlier said it was ready to raise base wages by 7.5 percent this year and 3 percent next year, and hike other benefits for a roughly 12 percent overall pay rise.

Jahn said that the management considered the strike a closed matter and expected to recoup the lost production.

"We lost some cars, but we will catch up with it in the foreseeable future," he said.

The unions said in a statement they would help to make up for the lost production.

Skoda's management has said that big pay hikes would put into question further investments at Skoda, a Communist-era state firm turned into a successful exporter under Volkswagen, which bought it in 1991.

Skoda had sales of $9.92 billion (203.7 billion crowns) last year and has more than 27,000 employees. It is the country's largest exporter and a key customer for dozens of parts makers.

The average wage for manual workers is $1,068 (22,000 crowns), 10 percent above the national average but a fraction of wages at Volkswagen's plants in Germany.

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