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05/09/2013 | Paris

On 5 September, the ninth meeting was held with employee representatives to build the new Social Contract that will help drive the Company's recovery.

The meeting began with a review of the Group's interim financial results presented last 31 July, which emphasised how well the turnaround plans are progressing, but in a business environment that remains very weak and at a time when the Automotive Division is still not profitable, with a net recurring operating loss of €510 million for the first half.

Two major issues that will help the Group to recover and maintain a strong manufacturing base in France were discussed:

  • The organization of working hours in the production plants
  • Wage moderation and labour cost initiatives (labour competitiveness in France) that will secure the future of the French plants

The organization of working hours in the production plants

PSA Peugeot Citroën has to be able to respond to fluctuations in automobile demand, while achieving the proper balance between maintaining employee compensation and limiting the cost of doing business (short-time working, which represents 30% of a normal day's labour costs, has increased sharply with the fall-off in production output).

In this regard, several proposals were made with the aim of simplifying the current variable working hours system in the production plants (with H+ extra hours and H- hours off), in particular by:

  • Simplifying the plant time banks, to make the accounts easier to understand (1 bank instead of 5)
  • Introducing a variable working hours system that would make it possible to manage most of the fluctuations in demand over a single year (and no longer over several years).
    Management proposed to the unions that together they define the upper and lower limits for the variable hours, as well as the procedures for managing the balance of hours left in the plant time banks at year-end (with short-time work introduced in the event of a negative balance)

Wage moderation and labour cost initiatives at PCA France

Management reminded participants of the need to work on labour competitiveness in France. Initiatives to improve plant competitiveness have already been deployed by our Spanish colleagues, as well at the Sevelnord and Française de Mécanique plants. This aspect of the negotiation is necessary to ensure the future of all the production facilities in France. It will also contribute to the Rebound plan to turn around the Company.

The Group's wage policy was presented, with an emphasis on:

  • Two factors weighing on competitiveness:
    • Labour costs in France are among the highest in Europe (€36.84/hour versus, for example, €36.24 in Germany, €22.94 in the United Kingdom, €22.43 in Spain, €8.88 in Slovakia and €3.82 in Romania)
    • PCA's labour costs in France are around 8% higher than in the rest of French industry.
  • The increase in purchasing power across every employee category since 2002
    • For non-exempts, the Mandatory Annual Negotiations budget for across-the-board raises has always exceeded inflation.
    • Salaries and wages for operators, clerical employees, technicians, supervisors and managers are well positioned
      • Minimum wages are significantly higher than the legal minima. In 2013, for example, the guaranteed minimum annual income stood at €21,450 compared with €17,163 for someone earning the legal minimum wage.
      • Compensation for the Group's operators, clerical employees, technicians and supervisors exceed standard market practices.

In the current situation, wage policy must be adjusted, but without reducing salaries (as would be possible as part of a legal competitiveness agreement).

  • Management is proposing to retain the fundamentals of the Group's wage policy for non-exempts, i.e. no cut in salary, a guaranteed year-end bonus of at least one month's salary, shift premiums, most of the hourly premiums, employee benefits, non-discretionary profit-sharing, discretionary profit-sharing and employer contributions to the PEAG employee savings plan.
  • Across-the-board raises would be frozen in 2014 and a moderate merit raises budget would be planned to encourage performance, mobility, promotions and compliance with agreements. For 2015 and 2016, the across-the-board and merit raises will be moderate and defined depending on progress on the 2015 Rebound plan and the Company's financial results.
  • The proposed initiatives to reduce labour costs primarily concern adjustments to premiums and practices not covered by legislation or collective agreements, such as certain premiums for night or Saturday work, the back-to-school bonus and the employer contribution to the PEP employee savings plan.

These measures would contribute to the Group's recovery.

These measures would contribute to the competitiveness of PCA labour costs in France.

These measures would be a pre-condition for securing the future of the PCA production and R&D facilities in France. As part of an agreement, management would present a medium-term plan ensuring the sustainability of PCA facilities in France.

Next meeting on 11 September 2013

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New Social Contract - Meeting of 5 September (261 Ko)
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