Volvo is to freeze staff pay, abolish bonuses and cut overtime at its factories as part of a plan to help the company save £35 million, the company has announced.
Volvo has struck a deal with unions to reduce overtime at its plants in Holland and Sweden, and to suspend any pending pay reviews until January 2010. The deal also includes 45 ‘stay-at-home’ days for staff at its factories in Gothenburg, Skovde, Floby and Olofstrom, during which production lines will be stopped and workers’ pay will be reduced by 15 per cent.
The plan will have been easier for unions to accept, because it includes pay adjustments for managers and white-collar workers too. Volvo’s top 40 executives will each take a 5 per cent pay cut, and no bonuses will be paid throughout 2009 and 2010.
“This is a unique agreement,” said Volvo President and CEO Stephen Odell. “We need to take extraordinary measures to improve the competitiveness of our business. We have had a good and open dialogue with the unions. This agreement is a good model to secure our business.”
The plan follows the announcement, late last year, of a ‘right-sizing’ plan, which involved around 4500 redundancies worldwide.