Opel unions agree four-year wage cap: Bonuses linked to reduced absenteeism

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GENERAL MOTORS' European subsidiary, Adam Opel, yesterday signed a four-year deal with its works council limiting future wage increases and bonus payments as part of a programme to cut costs by at least 30 per cent.

Rejecting the idea of a four- day week sought by its rival Volkswagen to avoid massive lay-offs, Opel said the brake on labour costs, combined with substantial savings from new working arrangements, would enable its plants to remain fully competitive.

The innovation of yesterday's agreement lies in linking wage increases to the total rise in labour costs and bonus payments to reductions in absenteeism. Opel workers at present earn about 20 per cent above the agreed union rate for the engineering sector.

According to yesterday's deal any future sectoral wage increases negotiated by the unions above 2 per cent will be partly recouped by Opel through a corresponding reduction in its voluntary wage supplement. The deal amounts to a partial cap on wage increases over a four-year period.

Payment of a full Christmas bonus will be linked to absenteeism being kept below 7 per cent. Opel said a 1 per cent reduction in absenteeism saved it DM23m ( pounds 9.1m) a year.

'High labour costs in Germany can no longer be compensated by clever products, top quality and good productivity,' said David Herman, Opel's chief executive.

Opel claimed its deal would save 3,600 threatened jobs.