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Germans OK longer work hours to save jobs

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Germans OK Longer Hours to Save Jobs
Fri Jul 23, 2004 12:14 PM ET

By Sabine Siebold and Mark Thompson
STUTTGART/FRANKFURT, Germany (Reuters) - Pressure to lengthen Germany's working week looked set to increase after employees at carmaker DaimlerChrysler and tourism firm Thomas Cook agreed on Friday to work longer hours to save jobs and cut costs.

DaimlerChrysler workers agreed to implement a 40-hour week for some workers and to cut paid break time to secure 6,000 jobs in Germany, in a deal that will save the company 500 million euros ($613 million) a year from 2007.

German Chancellor Gerhard Schroeder greeted the carmaker's deal with the IG Metall union as "a victory for common sense," which would strengthen Germany's economic recovery and set a precedent for talks at rival car maker Volkswagen.

"I am certain that after DaimlerChrysler the negotiations at Volkswagen over cost cuts and job security will lead to a successful agreement," said Schroeder, who is on holiday in Italy, in a statement.

VW, Europe's largest carmaker, is looking to cut labor costs by 30 percent in the medium-to-long term to preserve 176,000 jobs in Germany. Negotiations that could lead to a 40-hour week are due to start later this year.

Schroeder, a former premier of VW's home state of Lower Saxony, said the Daimler agreement would guarantee companies more flexibility as they face global competition while at the same time securing jobs in Germany.

At Thomas Cook, workers agreed to raise their weekly working hours to 40 from 38.5 for one year from August, with an option for a 12-month extension, and to delay a pay rise by 18 months.

Pilots and cabin crew at Condor, Thomas Cook's charter airline, also agreed to longer hours, sources close to the talks said. Europe's second-biggest tourism group, which is aiming to return to profit in 2006, declined to confirm details of the deals.

Thomas Cook, jointly owned by Deutsche Lufthansa AG and retailer KarstadtQuelle, is already eliminating 400 jobs and sought the concessions in order to reach a target of reducing costs by 25 percent.

It had a record loss of 251 million euros ($307.8 million) in fiscal year 2003.


KarstadtQuelle will also soon begin talks aimed at achieving greater flexibility in working hours at its department stores. Some 4,000 jobs are at risk and the company has said a working week of 40 to 42 hours may be necessary to save them.

DaimlerChrysler shares traded 0.6 percent firmer at 36.43 euros by 1504 GMT, slightly outperforming the Dow Jones Stoxx European autos index.

DaimlerChrysler said its deal, struck after weeks of talks and staff protests that disrupted production, would help luxury unit Mercedes grow profitably and guarantee production in Germany until 2012.

Over 60,000 employees took part in nationwide protests last week, incensed that they were being asked to make sacrifices while senior DaimlerChrysler management appeared untouched by the group's problems at Chrysler in the United States and at its Japanese partner, Mitsubishi Motors.

In a conciliatory gesture, DaimlerChrysler's management board agreed to take a cut of 10 percent in overall pay, while 3,000 managers in Germany will also have their packages reduced as part of the cost-cutting program.

The dispute centered on DaimlerChrysler's home state of Baden-Wuerttemberg, where workers enjoyed better terms and conditions than at other plants in Germany.

Mercedes had threatened to move production of the new version of its C-class car from Sindelfingen, near the group's Stuttgart headquarters, to plants at Bremen in northern Germany and at East London in South Africa, threatening 6,000 jobs.

Paid hourly breaks for workers in Baden-Wuerttemberg will be cut by roughly half, with some workers losing 30 hours of breaks per year. Workers in all of Daimler's development and planning departments will implement a 40-hour working week.

The carmaker's productivity plan follows a similar move by manufacturing and technology giant Siemens AG, which recently won employee agreement to increase working hours at two German works without extra pay.

In France, workers at a Robert Bosch car-parts factory voted on Monday to lengthen their working hours to save jobs, making them the first employees to vote to scrap France's 35-hour week. (Additional reporting by Friederike Rosenstock in Frankfurt and Moritz Doebler in Berlin)

($1=.8155 Euro)

Reuters 2004. All Rights Reserved.

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