- The IG Metall union had proposed $1.6 billion in cost savings that included forgoing bonuses for 2025 and 2026.
- VW is seeking 10% wage cuts and has threatened to close German factories for the first time in its history.
- The next round of negotiations has been scheduled for December 9.
VW workers across Germany have decided to go out on warning strikes starting Monday, December 2, as tensions rise between unions and the German car manufacturer that’s planning to close plants, cut wages, and initiate large layoffs.
These warning strikes typically last from a few hours and come after the IG Metall union was unable to reach an agreement with VW on cost cuts. In late November, the union proposed €1.5 billion ($1.6 billion) in cost savings, which would include forgoing bonuses for 2025 and 2026. It also proposed using money from wage increases to create a fund that would finance temporarily reduced working hours for parts of the business facing overcapacity issues.
Read: VW Ditches Decades-Old Job Protections In Germany, Sets Stage For 2025 Layoffs
“The Group’s finances are not yet in the red, like they were in crises in the 1970s and 1990s,” union chief negotiator Thorsten Groeger said. “We can see room to take action and make investments to correct the expensive mistakes of the past.” He also warned that, if they can’t come to an agreement, “this will be the toughest wage dispute Volkswagen has ever seen.”
In response to the union’s proposal, VW said that “although there may also be positive effects in the short term, the measures will not lead to any sustainable financial relief for the company in the coming years.” Speaking with Reuters, a VW source added these measures would simply buy the company time which it doesn’t have.
VW is seeking 10% wage cuts across the board, believing this will allow it to significantly cut costs and boost profitability, helping it to better rival cheaper competition from China. It’s also possible that factories in Germany could be closed for the first time in VW’s history.
A drop in demand across Europe and China, as well as poor management decisions and high costs, are among the factors that have led to VW’s woes. The company does not expect pre-pandemic demand to return, meaning it now has excess production capacity.
Representatives from IG Metall and VW are scheduled to meet on December 9 for the next round of negotiations. If a deal isn’t reached, 24-hour strikes could be initiated, or the union may decide to trigger “unlimited strikes” that could last longer.
