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July 10, 2005

More on Change at Volkswagen

From the Financial Times

VW to Change from the Top Down

Peter Hartz is widely seen as one of the men who helped save Volkswagen in the 1990s through a series of innovative reforms such as the four-day week. But the so-called VW system he created, under which unions and workers are far more intimately involved in strategic decisions than at other companies, has recently come in for heavy criticism for holding the company back from making the changes needed to boost profitability.
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The carmaker has one of the most unionised workforces in Germany, with 97 per cent of employees belonging to IG Metall. But these workers have been shocked by allegations of senior members going on luxury holidays and visiting prostitutes with money given by the company for all employees. VW executives hope the scandal will create pressure to end the left-wing grouping that has dominated the company. Jürgen Peters, the head of IG Metall, sits on the supervisory board, while Mr Hartz is a member of the left-wing Social Democrats.
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Christian Wulff, a supervisory board member and the state premier of Lower Saxony, which is VW's largest shareholder, has tried to use the scandal to put an end to the left's dominance.

July 10, 2005 in Comparative Labor Relations, Volkswagen | Permalink

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