The agreement comes as a solution to an impasse over cost-saving measures amid declining demand in key markets.
Volkswagen Reaches Agreement to Preserve Jobs and Avoid Plant Closures in Germany
Volkswagen Reaches Agreement to Preserve Jobs and Avoid Plant Closures in Germany
In a pivotal deal, Volkswagen and the IG Metall union avert immediate redundancies while still planning job cuts by 2030.
Volkswagen has successfully negotiated a plan with the IG Metall trade union, which has prevented the closure of its plants in Germany and avoided immediate job losses for its workforce. However, the company has committed to reducing its workforce by more than 35,000 positions by 2030 through various “socially responsible” methods, expected to save the company around €15 billion (£12.4 billion). The car manufacturer had previously indicated that it might need to close plants for the first time ever in Germany to cut costs amidst economic pressures.
Following long discussions that began in September, union representatives announced on Friday that they had “succeeded in finding a solution” that secures job stability and paves the way for future investments. Initially, VW had considered shuttering up to three of its factories, alongside seeking a 10% pay reduction from its workers. On the other hand, the union was advocating for a 7% wage increase.
While production capacity at various facilities will be lessened, union leaders hailed the agreement as a significant achievement. “No site will be closed, no-one will be laid off for operational reasons, and our company wage agreement will be secured long-term,” stated Daniela Cavallo, head of IG Metall's works council. She went on to express pride in achieving a strong solution despite economic challenges.
The planned job reductions will likely be achieved through solutions such as voluntary early retirement. Additionally, a previously negotiated 5% wage increase will be suspended for 2025 and 2026 as part of a broader effort to support the company’s transformation. Volkswagen also plans to reduce its annual apprenticeships from 1,400 to 600 starting in 2026 and may consider relocating some production to Mexico while exploring alternatives for its Dresden and Osnabrueck facilities.
Oliver Blume, VW’s group CEO, emphasized the agreement as a critical step for the brand's future viability, particularly given the backdrop of unprecedented factory closures in its history. The company, alongside other German automotive manufacturers, has faced significant challenges due to diminishing demand in China—a key market for VW—and increasing competition from emerging Chinese brands in Europe.
In conjunction with the negotiations, around 100,000 employees participated in brief "warning strikes" across various sites to press the firm's management. The latest negotiation phase commenced earlier this week, with a pact sought before the holiday season. German Chancellor Olaf Scholz endorsed the deal as a "good, socially acceptable solution," highlighting the importance of maintaining jobs in the industrial sector.
Following long discussions that began in September, union representatives announced on Friday that they had “succeeded in finding a solution” that secures job stability and paves the way for future investments. Initially, VW had considered shuttering up to three of its factories, alongside seeking a 10% pay reduction from its workers. On the other hand, the union was advocating for a 7% wage increase.
While production capacity at various facilities will be lessened, union leaders hailed the agreement as a significant achievement. “No site will be closed, no-one will be laid off for operational reasons, and our company wage agreement will be secured long-term,” stated Daniela Cavallo, head of IG Metall's works council. She went on to express pride in achieving a strong solution despite economic challenges.
The planned job reductions will likely be achieved through solutions such as voluntary early retirement. Additionally, a previously negotiated 5% wage increase will be suspended for 2025 and 2026 as part of a broader effort to support the company’s transformation. Volkswagen also plans to reduce its annual apprenticeships from 1,400 to 600 starting in 2026 and may consider relocating some production to Mexico while exploring alternatives for its Dresden and Osnabrueck facilities.
Oliver Blume, VW’s group CEO, emphasized the agreement as a critical step for the brand's future viability, particularly given the backdrop of unprecedented factory closures in its history. The company, alongside other German automotive manufacturers, has faced significant challenges due to diminishing demand in China—a key market for VW—and increasing competition from emerging Chinese brands in Europe.
In conjunction with the negotiations, around 100,000 employees participated in brief "warning strikes" across various sites to press the firm's management. The latest negotiation phase commenced earlier this week, with a pact sought before the holiday season. German Chancellor Olaf Scholz endorsed the deal as a "good, socially acceptable solution," highlighting the importance of maintaining jobs in the industrial sector.
