Opel union spurns GM's demand for wage freeze

FRANKFURT -- German trade union IG Metall said it will not accept demands by General Motors to freeze wages for workers at its money-losing Opel division in Germany.

"This would mean that Opel would not fulfill the industrywide wage hike [in Germany] on a sustained basis and effectively no longer be a part of the industrywide wage structure," the union said in a statement on Tuesday.

GM is stepping up the pressure on the union as it sees Germany at risk of slipping into recession. A German recession would pose an "incremental challenge" to GM's turnaround plan, Vice Chairman Stephen Girsky told reporters on Jan. 13 in Detroit.

"Germany is slowing down," he said. "France, Spain and Italy haven't found a bottom yet. Russia is slowing down; on the other hand, the UK is looking a little better."

In a letter to the union on Tuesday, Girsky said GM is willing to support Opel financially if the German operations are set up competitively and profitably. Opel unions must agree to "further considerable" cost cuts as conditions in the European car market remain ''catastrophic" and are unlikely to recover quickly, Girsky said.

He said car production may be halted at the company's Bochum, Germany, plant, which builds the Zafira Tourer minivan, at the end of 2014 instead of 2016, unless unions agree to further concessions.

IG Metall called the comments ''unacceptable.''

An Opel spokeswoman said no decisions had yet been made, adding that "negotiations with the works council are still ongoing."

Opel vehicle sales in the EU and EFTA countries in 2012 fell 16 percent to 834,790 units in a market down 7.8 percent to 12.5 million, according to industry association ACEA.

GM has said it expects Opel to break even sometime around the middle of the decade.

Reuters and Bloomberg contributed to this report