Mandelson cash challenge for car firms hoping for more government handouts

Car manufacturers will have to prove they really need government cash to top up the wages of workers whose hours have been cut during the recession.

Business secretary Peter Mandelson said last week the government may offer car makers an “operating subsidy” to help boost the salaries of those staff who are working shorter hours. But the industry must present “fully costed proposals” on how it could work, he said.

Global engineering company GKN, which makes car parts for the UK market, announced 2,800 job cuts to its worldwide workforce, 242 of which were in the UK. A spokesman told Personnel Today the company had introduced shorter working hours in response to the recession, and was looking at proposals to bid for government subsidies.

“Already some governments [worldwide] have in place support for short time working – all our plants world wide are on short time,” he told Personnel Today.

And the union Unite has long asked the government for help in topping up car workers’ wages.

A spokeswoman for the Unite said: “We have asked [the government] for a strategic fund for manufacturing of £13bn, based on what the German government announced in October last year.”

But David Yeandle, head of employment policy at manufacturers’ body the EEF, said the government proposals for ‘operating subsidies’ were unclear. “It will take a while for the smaller companies to understand what it means,” he said.

Even with help from the government, reducing workers’ hours could only be a temporary measure to save more jobs, he added. “One of the reasons the government is nervous is that it knows [the recession] is not going to last for just three or four months, and it might think, could the money have been better spent.”

The UK automotive sector has suffered thousands of jobs losses since the start of the year. Many high-profile companies, including Aston Martin, Vauxhall, Jaguar Land Rover and Honda have either reduced hours or shut down plants as demand has plummeted.

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