UPDATE: VW Labor Chief Says Near Deal On Staff Shareholding

Volkswagen AG's (VOW.XE) top labor representative and deputy supervisory board chairman said Thursday he expects an agreement on staff becoming shareholders to be reached soon in a move that would widen ownership of the tightly-held German automotive group.

"Talks are progressing well... we're close to an agreement," Bernd Osterloh told reporters. He declined to elaborate as a final decision hasn't been reached.

Osterloh told Dow Jones Newswires in June 2011 that Volkswagen's labor unions want to take a voting stake of up to 3% in the company to safeguard workers' rights.

A 3% voting stake would make Volkswagen employees the company's fourth-largest shareholder after Porsche Automobil Holding SE (PAH3.XE) with a 50.7% stake, the German state of Lower Saxony with just above 20% and Qatar Holding LLC with 17%.

The deal would be based on a plan drafted in August 2009 after Volkswagen's labor unions in a joint effort with the company's management successfully averted a takeover launched by Porsche's former chief executive, Wendelin Wiedeking, and former chief financial officer, Holger Haerter.

In August 2009, Volkswagen's supervisory board rubber-stamped a plan to forge a combined company with Porsche after the Stuttgart-based sports car maker's attempt to gain control of its much-larger peer backfired when credit markets dried up. Volkswagen's board stated at the time that it would be willing "to offer a substantial investment opportunity to the world-wide employees."

The plan to take a substantial stake in the company reflects growing confidence among labor unions, which traditionally have had a strong influence at Volkswagen, as the Wolfsburg-based company is on track for a new vehicle sales record in 2012, driven by demand in emerging markets.

Osterloh said he would support the United Auto Workers union in its bid to represent workers at Volkswagen's new U.S. plant in Chattanooga, Tenn., but added that it is up to the company's work force in the U.S. to decide this.

"We'll make sure that the UAW gets a chance," he said. Volkswagen's staff at the Chattanooga plant would have to vote on the UAW representing workers there in the future.

Osterloh confirmed that the collective bargaining agreement reached last week by Germany's largest labor union IG Metall for more than three million workers could be the basis for a deal for Volkswagen's own staff. But he wants to achieve some additional benefits at VW, for example related to transferring certain temporary workers on permanent contracts faster.

Last week, the powerful IG Metall union agreed with employers to raise wages in Germany's engineering sector by 4.3% percent over 13 months.

Osterloh said he would support a settlement of 4.3% over 12 months for VW's German workforce. The deal would affect around 100,000 staff at six plants in Germany.

Osterloh and other VW labor representatives will continue negotiations with the company next Wednesday.

-By Christoph Rauwald, Dow Jones Newswires; [phone]; [e-mail]; Twitter: @Rauwald