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Wednesday, 21 November, 2001, 22:41 GMT
Volkswagen workers accept pay cut
VW Polo
VW says new production methods need fewer workers
Workers at Volkswagen in Brazil have hammered out an agreement to avoid 3,000 redundancies.

The 16,000 workers - who last week went on strike - have agreed to a 15% reduction in their wages in order to save the jobs.

The deal is designed to safeguard jobs at the Anchieta factory for the next five years and includes the necessary investment in the 42-year old plant's production lines.

The agreement ends two weeks of bitter rowing between unions and the company.

The German carmaker is Brazil's largest car maker, but demand for cars has fallen as the country's economy has slowed.

Urgent negotiations

The Anchieta factory near Sao Paulo employs 16,000 of VW's 28,000 workforce in Brazil.

The President of the ABC MetalWorkers Union Luiz Marinho flew to Germany to negotiate with the firm's chiefs during the one-week long strike.

The firm had wanted to make 6% of its Brazilian workforce redundant, only to replace them with new workers who would be paid 30% less.

VW says the job cuts were needed because of falling demand and the introduction of new technology.

Falling sales

Car sales in Brazil have dropped sharply since July due to a combination of high interest rates and currency weakness.

VW sales in October were 15% down on the same period last year, while production dropped 13%.

Many Brazilian car factories have cut down on production, with some giving compulsory holidays and redundancies.

The Brazilian energy crisis earlier this year and the economic woes of neighbouring Argentina have conspired to weaken the currency and push interest rates higher in one of Latin America's largest economies.

The economy is predicted to grow at some 2% this year, about half of original expectations.

See also:

30 Oct 01 | Business
Volkswagen profits beat forecasts
12 Nov 01 | Business
Volkswagen faces Brazil strike
08 Nov 01 | Business
Volkswagen to cut 3,000 Brazil jobs
27 Jul 01 | Business
VW profits accelerate
28 Aug 01 | Business
Volkswagen agrees job creation pact
30 May 01 | Business
VW fined 31m euros
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