Fiat Chrysler and CNH Industrial sign Italian labor deal

By Gianni Montani

TURIN, Italy (Reuters) - Carmaker Fiat Chrysler Automobiles (FCA) <FCHA.MI> and tractor manufacturer CNH Industrial <CNHI.MI> signed a four-year labor deal for workers in Italy on Tuesday, in a sign of improving relations with unions.

The 2015-18 agreement, which applies to all 85,000 employees of the two companies in the country, includes a performance-based compensation scheme linked to the achievement of certain efficiency and profitability targets.

If the targets are met, employees will be entitled to a bonus of 7,000-10,700 euros ($7,670-11,730) over four years, the two companies said in a joint statement. The scheme was first introduced at FCA's carmaking operations earlier this year and has now been extended to other parts of the firm in Italy, including its component-making subsidiaries, and to CNH Industrial.

FCA Chief Executive Sergio Marchionne, who is also chairman of CNH Industrial, has clashed with unions in the past as he sought to get them to accept tougher rules on working hours, sick pay and strikes, which he said was necessary to allow Italian plants to compete with their rivals abroad.

Marchionne also took Fiat out of Italian employers' confederation Confindustria so that it was no longer bound by the collective labor rules negotiated between the confederation and unions.

Unions initially criticized these moves, which they saw as a precursor to moving production abroad, but they have since been encouraged by FCA's investments in plants and new models and the creation of jobs.

FCA and CNH Industrial use the same collective labor agreement because both have exited Confindustria and operate in related sectors. CNH Industrial is also seen as FCA's sister company after being created through the combination of spun-off Fiat Industrial with CNH Global.

Unions welcomed Tuesday's agreement, saying a productivity-based bonus system made sense at a time when the auto sector in Europe was still gradually recovering from a six-year slump in sales.

The deal was signed with the FIM-CISL, UILM-UIL, FISMIC, UGL Metalmeccanici and Associazione Quadri e Capi Fiat unions. The FIOM union, which has repeatedly clashed with Fiat over pay and conditions in Italian plants, did not participate.

The Italian agreement comes as FCA prepares to start negotiations in the United States with the United Auto Workers (UAW) union next week for a new four-year contract. The current one expires in mid-September.

Last year, FCA workers in the United States represented by the UAW - around 36,000 - received $2,750 in bonus pay linked to North American profit for the company.

(Additional reporting by Bernie Woodall; Writing by Agnieszka Flak; Editing by Pravin Char)