Productivity at Volkswagen's Wolfsburg, Germany plant is expected to increase by 12.5 percent this year, the company said today.

"We will likely raise it to 27 vehicles per worker in the Wolfsburg site in 2007 -- last year it was 24," Volkswagen personnel boss Horst Neumann said in a statement following a meeting at the plant with staff.

Separately, the group's senior labor leader, Works Council Chairman Bernd Osterloh, told his colleagues that it was "absolutely necessary" to continue to improve their performance to stave off an attack on VW's home turf from Japanese rival Toyota.

"If the workforce really pushes hard then there will also be considerable productivity gains in the coming years," he was quoted as saying in a statement by the works council.

He called for a solution to the resulting labor overhang, citing an agreement from management from last year that a new Golf derivative with an expected volume of 40-45 thousand vehicles per year would be built in Wolfsburg.

"Once again our home plant would then have an ambitious annual capacity of 480,000 vehicles, and with this added model more than 1,100 jobs would be secured," Osterloh said.

According to the company a further 10,000 employees would enter into early retirement by 2012.