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WORLD> Europe
Volvo unit saves 600 jobs with salary cut deal
(Agencies)
Updated: 2009-05-29 22:18

STOCKHOLM -- Swedish truck maker AB Volvo on Friday said it would cancel some previously announced layoff plans in its Powertrain unit, saving 600 jobs after reaching a deal with a labor union to instead slash salaries and working hours.

The unit, which makes engines and gearboxes, will save jobs in the Swedish towns of Skovde and Koping by introducing the new working conditions, Volvo said.

Goteborg-based Volvo said the agreement is valid from June 1 to March 31 next year, during which time it has guaranteed not to announce any new layoffs.

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Under the deal, working hours will be cut by 20 percent, and pay checks reduced by up to 8 percent.

"The agreements on shortening of work hours are extremely important for us since it is then possible to retain expertise in the company despite the highly substantial reduction in demand," said Peter Karlsten, Volvo Powertrain president.

Volvo has announced thousands of layoffs during the financial crisis because of declining demand for heavy vehicles.

The company, which also makes buses and components for aircraft engines, has around 100,000 staff worldwide and production facilities in 19 countries. It's a separate company from Volvo Cars, which is owned by Ford Motor Co.

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