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

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With regard to work<strong>in</strong>g hours, the Agreement calls for
reductions that fall short of the request put forth by the
unions, partly tak<strong>in</strong>g <strong>in</strong>to account the employers’ need for
greater flexibility. However, it <strong>in</strong>troduces heavy adm<strong>in</strong>istrative
mechanisms.
As a result of the wage <strong>in</strong>creases and changes <strong>in</strong> benefits and
work rules provided under the Industry-Wide Labor Agreement,
the companies of the <strong>Group</strong> will <strong>in</strong>cur an <strong>in</strong>crease <strong>in</strong> labor
costs of 3.4% (3% <strong>in</strong> the <strong>1999</strong>-2000 period), which, however,
must be added to the other pay raises granted under previous
labor agreements.
As regards negotiations at the Company level, on September
30, <strong>1999</strong>, the unions cancelled the <strong>Group</strong>-Wide Agreement of
March 18, 1996. <strong>The</strong>y are currently <strong>in</strong> the process of def<strong>in</strong><strong>in</strong>g
the requests that they will eventually submit to the Company.
Developments <strong>in</strong>volv<strong>in</strong>g <strong>Group</strong> companies outside Italy
<strong>in</strong>cluded the successful completion of the negotiations for the
renewal of the compensation portion of the Labor Agreement
for Metalwork<strong>in</strong>g Employees of Baden-Württemberg, <strong>in</strong>
Germany. This agreement, which has been used as a model
for negotiations <strong>in</strong> other areas of Germany, called for a wage
<strong>in</strong>crease of 3.2% over a 14-month period, start<strong>in</strong>g <strong>in</strong> March
<strong>1999</strong>, plus a 1% annual bonus.
In the other countries, where labor negotiations took place at
the company level, salary <strong>in</strong>creases were <strong>in</strong> l<strong>in</strong>e with the rate
of <strong>in</strong>flation. <strong>The</strong> situation is peculiar <strong>in</strong> France, where the goal
of the <strong>Group</strong>’s wage policy is to conta<strong>in</strong> labor cost <strong>in</strong>creases
as much as possible, <strong>in</strong> view of the higher burden that will
result from the implementation of a new law, which reduced
work<strong>in</strong>g hours, mandat<strong>in</strong>g a statutory 35-hour work week
start<strong>in</strong>g on February 1, 2000.
In Brazil, wage negotiations produced compensation levels
that are consistent with local <strong>in</strong>flation trends, while the <strong>Group</strong>
implemented <strong>in</strong>cisive restructur<strong>in</strong>g programs that brought
about the reductions needed to br<strong>in</strong>g output <strong>in</strong> l<strong>in</strong>e with the
decreased demand for automobiles of the Mercosur countries.
In Poland, the salient event of the year was the discussion
between unions and employers about a proposed bill that
would amend the local labor code. <strong>The</strong> issues of a reduction
<strong>in</strong> weekly work<strong>in</strong>g hours from 42 to 40 hours and the
<strong>in</strong>troduction of a ceil<strong>in</strong>g <strong>in</strong> the number of allowable daily or
weekly work hours received particular attention.
“... discussions with the unions and <strong>in</strong>volvement of the
employee representatives ...”
<strong>The</strong> annual meet<strong>in</strong>g of the European Works Council for the
<strong>Fiat</strong> <strong>Group</strong> was held <strong>in</strong> Tur<strong>in</strong> on October 28 and 29, <strong>1999</strong>.
It was attended by 28 employees represent<strong>in</strong>g the <strong>Group</strong>
companies that operate with<strong>in</strong> the European Union. <strong>The</strong>
meet<strong>in</strong>g provided an opportunity to discuss the <strong>Group</strong>’s
strategies and goals with the addresses by Company Senior
Executives.
<strong>The</strong> impact that the strategies pursued by the Company will
have on employment and work<strong>in</strong>g conditions was the subject
of special meet<strong>in</strong>gs held with the unions <strong>in</strong> the different
countries where the <strong>Group</strong> operates, <strong>in</strong> accordance with local
laws and practices.
<strong>The</strong> <strong>Group</strong> made every effort to use the flexible employment
options available <strong>in</strong> the various countries where it operates
when respond<strong>in</strong>g to the need to adjust its level of output to
changes <strong>in</strong> market demand. In Italy, the <strong>in</strong>creased production
required for the launch of new models by Iveco (new Daily)
and <strong>Fiat</strong> Auto (new <strong>Fiat</strong> Punto and Lancia Lybra) was handled
with overtime work and with employees hired with fixed-term
contracts or through temporary agencies.
PROFESSIONAL DEVELOPMENT AND THE EDUCATIONAL
SYSTEM
<strong>The</strong> significant professional development effort carried out by
the <strong>Group</strong> was focused primarily on enhanc<strong>in</strong>g corporate
competencies and values, support<strong>in</strong>g the implementation of
strategic changes and <strong>in</strong>novation <strong>in</strong> work processes, and
foster<strong>in</strong>g general cultural <strong>in</strong>tegration and transformation.
“... professional development...”
<strong>Fiat</strong> <strong>Group</strong> companies throughout the world <strong>in</strong>vested
a total of 122 million euros <strong>in</strong> professional development.
This amount is equivalent to 2.2% of the total payroll.
Isvor <strong>Fiat</strong> cont<strong>in</strong>ued to be the ma<strong>in</strong> provider of professional
development services to <strong>Group</strong> companies. However, Isvor
<strong>Fiat</strong> has successfully reached out to clients outside the
<strong>Group</strong>, who now account for 13% of its revenues.
In <strong>1999</strong>, Isvor <strong>Fiat</strong> provided more than 40,000 man-days
of tra<strong>in</strong><strong>in</strong>g (22,000 to <strong>Group</strong> companies), <strong>in</strong>clud<strong>in</strong>g 24,000
man-days of assistance and counsel<strong>in</strong>g (13,000 to <strong>Group</strong>
companies), or over 25% more than <strong>in</strong> 1998. Of the more
than 60,000 people who received tra<strong>in</strong><strong>in</strong>g from Isvor, about
35,000 were employees of the <strong>Group</strong> and 25,000 came from
the sales network and external clients. Isvor <strong>Fiat</strong> delivered its
services through its traditional facilities <strong>in</strong> Italy, the tra<strong>in</strong><strong>in</strong>g
centers <strong>in</strong> Brazil, Argent<strong>in</strong>a and India, and through locations
established <strong>in</strong> France, Germany, Spa<strong>in</strong>, Great Brita<strong>in</strong> and
Poland.