After intensive negotiations, the automotive giant avoids factory shutdowns while planning significant job reductions by 2030.
Volkswagen Strikes Deal to Preserve German Jobs as Plant Closures Averted
Volkswagen Strikes Deal to Preserve German Jobs as Plant Closures Averted
Volkswagen partners with IG Metall to cut jobs socially and invest for future sustainability.
Volkswagen has successfully negotiated an agreement with the IG Metall trade union that prevents the immediate closure of its factories in Germany and postpones compulsory redundancies. However, the deal includes a commitment to reduce the workforce by over 35,000 positions by 2030, with a focus on "socially responsible" measures, aiming for savings of around €15 billion (£12.4 billion). Previously, VW had indicated that closure of plants was a possibility due to cost-cutting pressures.
Following prolonged discussions that started in September, IG Metall announced on Friday that a solution has been reached, ensuring job security while promoting future investments. To address financial concerns, VW had contemplated shutting down up to three factories and proposed a 10% pay cut, while the union countered with a demand for a 7% wage increase. Despite plans for a production capacity reduction across its sites, union leaders welcomed the agreement.
Daniela Cavallo, chair of IG Metall's works council, expressed satisfaction, stating, "No site will be shut down, no one will face layoffs for operational reasons, and our wage agreement is secured for the long term." The planned 35,000 job cuts may largely occur through voluntary measures like early retirement. The agreement also entails suspending a previously agreed 5% wage increase in 2025 and 2026 to facilitate the company's transformation.
Furthermore, the annual number of apprenticeships available in Germany will be reduced from 1,400 to 600 starting in 2026, with discussions underway about relocating some production to Mexico. Options for the Dresden and Osnabrueck sites are also being explored.
Oliver Blume, VW's group chief executive, emphasized that this agreement sends a strong message regarding the long-term viability of the Volkswagen brand. Previous factory closures would have marked a significant shift in the company’s history. VW, amidst a declining demand for its vehicles in China and increased competition from Chinese brands entering the European market, faced significant challenges.
During negotiations, approximately 100,000 employees participated in brief "warning strikes" across various locations to urge management. The final phase of talks commenced on Monday, with the goal of reaching a resolution before the holiday season. German Chancellor Olaf Scholz praised the agreement as a "good, socially acceptable solution" in light of the industry's ongoing struggles.
Following prolonged discussions that started in September, IG Metall announced on Friday that a solution has been reached, ensuring job security while promoting future investments. To address financial concerns, VW had contemplated shutting down up to three factories and proposed a 10% pay cut, while the union countered with a demand for a 7% wage increase. Despite plans for a production capacity reduction across its sites, union leaders welcomed the agreement.
Daniela Cavallo, chair of IG Metall's works council, expressed satisfaction, stating, "No site will be shut down, no one will face layoffs for operational reasons, and our wage agreement is secured for the long term." The planned 35,000 job cuts may largely occur through voluntary measures like early retirement. The agreement also entails suspending a previously agreed 5% wage increase in 2025 and 2026 to facilitate the company's transformation.
Furthermore, the annual number of apprenticeships available in Germany will be reduced from 1,400 to 600 starting in 2026, with discussions underway about relocating some production to Mexico. Options for the Dresden and Osnabrueck sites are also being explored.
Oliver Blume, VW's group chief executive, emphasized that this agreement sends a strong message regarding the long-term viability of the Volkswagen brand. Previous factory closures would have marked a significant shift in the company’s history. VW, amidst a declining demand for its vehicles in China and increased competition from Chinese brands entering the European market, faced significant challenges.
During negotiations, approximately 100,000 employees participated in brief "warning strikes" across various locations to urge management. The final phase of talks commenced on Monday, with the goal of reaching a resolution before the holiday season. German Chancellor Olaf Scholz praised the agreement as a "good, socially acceptable solution" in light of the industry's ongoing struggles.
