updated 12/9/2004 8:38:13 AM ET 2004-12-09T13:38:13

General Motors Corp.'s German division announced a deal Thursday that will allow the struggling automaker to cut thousands of jobs while avoiding forced layoffs and offering generous incentives for employees to leave.

Adam Opel AG, the centerpiece of GM's European operations, said the agreement with employee representatives clears the way to slash up to 10,000 jobs in Germany over the next two years in GM's drive to end a four-year stretch of losses in Europe.

The program will encourage workers to leave voluntarily by offering them buyouts and help with retraining and job placement. Opel also said 15 percent of management jobs would be cut.

"The measures we have agreed together will restore our competitiveness in the auto sector," Opel chief executive Hans Demant said. "These cuts were not easy for anyone, but in the long term they will lead Opel to new successes."

The chief worker representative at Opel offered a different calculation of the job losses, saying the company plans to shed 6,500 jobs and shift others into part-time work, "spinoffs and joint ventures."

Opel will offer incentives "unprecedented in German industry" to make employees leave on their own, Klaus Franz said. For instance, a 50-year-old Opel worker with 30 years of service could expect severance pay of 216,000 euros ($287,000), full retirement benefits and a year of retraining, Franz said.

"Both sides expect this offer to be attractive for many employees," he said.

Opel did not say how much the incentives would cost.

The world's largest automaker said in October it plans to slash up to 12,000 jobs in the next two years in Europe, mostly in Germany, to cut excess capacity and return to profitability. The company expects the measures to save at least 500 million euros ($665 million) a year.

Worker representatives said Wednesday they had reached won a pledge from GM Europe to avoid plant closures and forced layoffs in the restructuring.

GM Europe has said it wants to carry out the job cuts — almost 20 percent of its work force — over the next two years. The group says it must reduce costs at its European brands Opel, Saab and Vauxhall because of weak consumer demand and increased competition from Japanese and other carmakers.

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