The Fiat Group in 1999 - Report on Operations - Fiat SpA

With this <strong>in</strong> m<strong>in</strong>d, it completed a survey of the competencies
possessed by over 25,000 <strong>Fiat</strong> executives and middle
managers worldwide.
<strong>Fiat</strong> Gra.De.EEIG cont<strong>in</strong>ued to handle the recruit<strong>in</strong>g, tra<strong>in</strong><strong>in</strong>g
and management of college graduates. It hired 70 new
eng<strong>in</strong>eers (a total of about 400 recent graduates were hired
by the <strong>Group</strong> <strong>in</strong> <strong>1999</strong>) from 12 countries where <strong>Fiat</strong> has
a significant <strong>in</strong>dustrial presence.
This program, which is carried out by a special Company
founded <strong>in</strong> London <strong>in</strong> 1998, pursues the development of
management resources by provid<strong>in</strong>g experience <strong>in</strong> different
countries, departments and companies, with the goal of
tra<strong>in</strong><strong>in</strong>g management employees with <strong>in</strong>ternational and
cross-functional skills.
LABOR COSTS AND INDUSTRIAL RELATIONS
<strong>The</strong> amount of the Results Bonus awarded <strong>in</strong> accordance with
the <strong>Group</strong> Agreement of March 18, 1996 was computed <strong>in</strong> July.
It was paid to about 112,000 employees of the <strong>Group</strong>’s ma<strong>in</strong>
metalwork<strong>in</strong>g companies <strong>in</strong> Italy. <strong>The</strong> Bonus is determ<strong>in</strong>ed tak<strong>in</strong>g
<strong>in</strong>to account the <strong>Group</strong>’s overall profitability and the progress
made by the Sectors toward atta<strong>in</strong><strong>in</strong>g quality targets for products
and processes. <strong>The</strong> average annual bonus, which <strong>in</strong> <strong>1999</strong>
totaled 2,625,000 lire before withhold<strong>in</strong>gs, equivalent to 1,342.79
euros, was less than a year ago, as improvement <strong>in</strong> quality
<strong>in</strong>dicators could offset only <strong>in</strong> part the decl<strong>in</strong>e <strong>in</strong> profitability.
“... compensation trends ...”
In Italy, where the <strong>in</strong>flation rate was 1.7%, average wages and
salaries <strong>in</strong>creased by 2.4% <strong>in</strong> <strong>1999</strong>, chiefly as a result of the
<strong>in</strong>creases scheduled under the Industry-Wide Labor Agreement.
Trend <strong>in</strong> results bonus payments
(average for white collars and blue collars <strong>in</strong> Italy)
(<strong>in</strong> euros)
1,227
1996
1,293
1997
1,541
1998
1,355
<strong>1999</strong>
1,000
750
500
250
0
Count<strong>in</strong>g mandatory benefit payments and pension-plan
contributions, labor costs grew by 2.2%. As a result, the
trend of a steady <strong>in</strong>crease <strong>in</strong> employee purchas<strong>in</strong>g power
cont<strong>in</strong>ued <strong>in</strong> <strong>1999</strong>.
In the other countries where it operates, <strong>Fiat</strong> focused
on keep<strong>in</strong>g compensation levels <strong>in</strong> l<strong>in</strong>e with cost-of-liv<strong>in</strong>g
<strong>in</strong>creases and <strong>in</strong>troduced variable compensation packages
with systems similar to the Results Bonus.
In <strong>1999</strong>, the performance-based variable compensation system,
which <strong>in</strong>cludes procedures and tools that s<strong>in</strong>ce the fiscal year
under review are applied uniformly to <strong>Group</strong> executives and
middle managers worldwide, produced payments that were
about 50% less than <strong>in</strong> 1998. This was due to the unsatisfactory
operat<strong>in</strong>g performance of certa<strong>in</strong> Sectors.
“... collective barga<strong>in</strong><strong>in</strong>g ...”
In Italy, the lengthy negotiations for the renewal of the
Industry-Wide Labor Agreement for Metalwork<strong>in</strong>g Employees,
which affects more than 120,000 employees of the <strong>Fiat</strong> <strong>Group</strong>
Italian companies, produced an agreement on June 8, <strong>1999</strong>.
<strong>The</strong> new contract has a validity of four years for the work rule
provisions, and two years for the compensation package. It
provides for an average gross pay <strong>in</strong>crease of 85,000 lire per
month, equivalent to 43.90 euros, payable <strong>in</strong> two <strong>in</strong>stallments
(43,000 lire from July <strong>1999</strong> and 42,000 from April 2000),
plus a lump-sum payment of 120,000 lire, equivalent to
61.97 euros, cover<strong>in</strong>g the period from January to June <strong>1999</strong>.
<strong>The</strong> Agreement also modifies the system of seniority-based pay
raises, <strong>in</strong>creases the contributions that the Company is required
to make to the Supplemental Pension Fund for Metalwork<strong>in</strong>g
Employees, and addresses issues concern<strong>in</strong>g part-time
employment, fixed-term contracts and temporary-agency workers.
Changes <strong>in</strong> gross compensation vs <strong>in</strong>flation
(average for white collars and blue collars <strong>in</strong> Italy)
Gross compensation Inflation
Dec.1995 Dec.1996 Dec.1997 Dec.1998 Dec.<strong>1999</strong>
121
118
115
112
109
106
103
100
<strong>Report</strong> on Operations – <strong>Fiat</strong> and its People
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