- From mid-next year, VW can enforce layoffs at German plants despite previous agreements.
- Previous labor deals protected German jobs until 2029, but those guarantees are ending.
- The company warned of potential factory closures in Germany, alarming union officials.
Volkswagen is scrapping several labor agreements it had at six German plants guaranteeing jobs until 2029, paving the way for potential layoffs in the automaker’s home market.
High-ranking executives have expressed concern about VW’s ability to compete with Asian rivals and are embarking on a cost-cutting drive. It recently threatened to close plants in Germany for the first time in history, sparking fierce opposition from local labor union officials. Now, it has canceled three-decade-old agreements safeguarding employment until 2029, meaning these guarantees will only run until the middle of next year.
Read: VW Faces Union Fury Over Proposed Factory Closures
The conglomerate says its namesake VW passenger car brand needs to achieve €10 billion ($11 billion) in cost savings by 2026, and this isn’t achievable at the current rate, even after recent retirements and voluntary buyouts offered in Germany.
“We must enable Volkswagen AG to reduce costs in Germany to a competitive level in order to invest in new technologies and new products with our own resources,” VW Labor Director Gunnar Kilian said.
To ease some concerns among workers, the company has offered to bring forward wage negotiations from mid-to-late October to this month instead. However, VW employee representative and supervisory board member Daniela Cavallo of the IG Metall union says “there will be no layoffs,” adding that labor officials “will put up a fierce resistance to this historic attack on our jobs.”
Cavallo says that if a new employee agreement can’t be reached by June 2025, agreements established before 1994 will come into force. These will result in a pay rise for staff at all six German plants, while also including a Christmas bonus, extra holiday pay, and higher bonuses for overtime, Reuters reports. However, VW will have the ability to force redundancies.
“A negotiated compromise is actually needed,” VW’s work council added. “Otherwise, VW will be able to push ahead with forced redundancies from summer 2025, but at the same time would immediately face enormous cost increases for all those who remain.”
