1. Scandal-hit Volkswagen agrees to 4.8 percent pay rise for workers

Scandal-hit Volkswagen agrees to 4.8 percent pay rise for workers

Volkswagen and Germany's industrial union have agreed on wage increases that will see pay rise 4.8 percent by next year.

By: | Frankfurt | Updated: May 20, 2016 3:09 PM
Volkswagen car, Volkswagen polo, auto industry, Volkwagen scandal, eurozone, European Central Bank, Eurozone Volkswagen and Germany’s industrial union have agreed on wage increases that will see pay rise 4.8 percent by next year. (Reuters)

Automaker Volkswagen and Germany’s industrial union have agreed on wage increases that will see pay rise 4.8 percent by next year, the kind of deal that could help the 19-country eurozone raise inflation from current dangerously weak levels.

The company said Friday that workers would get 2.8 percent more on Sept. 1 and then another 2.0 percent on Aug. 1, 2017.

Volkswagen is struggling to overcome the costs of a scandal over cars equipped with software that enabled them to cheat in diesel emissions tests. The company deducted 16.2 billion euros (currently $18.1 billion) from its earnings last year to cover recalls and other costs for 11 million cars sold with the software worldwide.

But worker representatives have been adamant that they should not pay the price for management’s mistakes.

Price in Germany fell 0.1 percent in April, and inflation in the eurozone is minus 0.2 percent. The European Central Bank, the chief monetary authority for the countries that use the euro as their currency, is pumping newly printed money into the economy through bond purchases in an attempt to raise inflation to a level more in line with a solid economy. The bank’s goal is just under 2 percent.

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