Volkswagen has struck a deal with IG Metall to avoid plant closures and mass layoffs, while agreeing to cut over 35,000 jobs by 2030 to save €15bn.
Volkswagen Strikes Groundbreaking Agreement to Preserve Jobs in Germany
Volkswagen Strikes Groundbreaking Agreement to Preserve Jobs in Germany
Major deal reached to prevent factory closures and mass layoffs as part of restructuring efforts.
Volkswagen has successfully negotiated a significant agreement with the IG Metall trade union that will prevent the closure of its plants in Germany and avoid immediate compulsory layoffs. While the deal will lead to more than 35,000 job reductions by the year 2030 through measures like early retirements, it aims to save the company around €15bn (£12.4bn). The German automotive giant had previously signaled that it might need to shut down several factories amid rising operational costs.
After ongoing negotiations that began in September, union representatives expressed their satisfaction with the solution, noting that it would secure jobs and allow for future investments. There were concerns that Volkswagen could close up to three factories and sought a 10% pay cut from its workforce at one point, while the union was advocating for a 7% pay increase.
Daniela Cavallo, chief of IG Metall’s works council, reiterated the victory in ensuring job security. She highlighted that no sites would be closed and no employees would face layoffs for operational reasons. The deal included provisions to pause a previously agreed-upon 5% wage increase in 2025 and 2026 to support the company's transformation efforts. Additionally, the annual number of apprenticeships in Germany will drop from 1,400 to 600 starting in 2026, with some production potentially moved to Mexico.
Volkswagen Group Chief Executive Oliver Blume underscored that this agreement stands as a crucial indication for the future of the Volkswagen brand. The prospect of factory closures in Germany would have marked a historic first for the company. The struggles of VW and other German car manufacturers stem from a downturn in demand from China, a once-thriving market, compounded by increased competition from emerging Chinese brands in Europe.
As negotiations wrapped up, a wave of "warning strikes" involving around 100,000 workers was initiated at various sites across Germany to apply pressure on management. The talks, which resumed recently, were aimed at reaching an agreement before the Christmas season. German Chancellor Olaf Scholz praised the outcome as a "good, socially acceptable solution" amid ongoing challenges in the automotive sector, which faces what has been described as a "formidable crash."
After ongoing negotiations that began in September, union representatives expressed their satisfaction with the solution, noting that it would secure jobs and allow for future investments. There were concerns that Volkswagen could close up to three factories and sought a 10% pay cut from its workforce at one point, while the union was advocating for a 7% pay increase.
Daniela Cavallo, chief of IG Metall’s works council, reiterated the victory in ensuring job security. She highlighted that no sites would be closed and no employees would face layoffs for operational reasons. The deal included provisions to pause a previously agreed-upon 5% wage increase in 2025 and 2026 to support the company's transformation efforts. Additionally, the annual number of apprenticeships in Germany will drop from 1,400 to 600 starting in 2026, with some production potentially moved to Mexico.
Volkswagen Group Chief Executive Oliver Blume underscored that this agreement stands as a crucial indication for the future of the Volkswagen brand. The prospect of factory closures in Germany would have marked a historic first for the company. The struggles of VW and other German car manufacturers stem from a downturn in demand from China, a once-thriving market, compounded by increased competition from emerging Chinese brands in Europe.
As negotiations wrapped up, a wave of "warning strikes" involving around 100,000 workers was initiated at various sites across Germany to apply pressure on management. The talks, which resumed recently, were aimed at reaching an agreement before the Christmas season. German Chancellor Olaf Scholz praised the outcome as a "good, socially acceptable solution" amid ongoing challenges in the automotive sector, which faces what has been described as a "formidable crash."
