According to the agreement, Volkswagen will reduce technical production capacity in German factories by more than 700 thousand vehicles. At the same time, the remaining employees will be guaranteed employment until 2030.
In the statement made by Germany’s largest union, IG Metall, “IG Metall’s red lines are being adhered to: The factory will not be closed, there will be no mass layoffs and there will be no long-term cuts in the collective agreement. In the end, a good compromise was reached.” statements were included.
Volkswagen’s agreement with the works council and labor union to lay off 35 thousand people and reduce capacity in Germany by 2030 came after 70 hours of difficult negotiations.
As for wages, there will be a de facto freeze for Volkswgaen employees. Volkswagen employees will not receive raises under the collective wage agreement for the next four years, and some bonuses will be eliminated or reduced.
In addition, a 5 percent salary increase will be transferred to a fund in two stages, not to employees’ accounts. The fund will be used to finance the reduction of flexible working hours for some of the workforce.
Volkswagen announced that the agreement will provide annual savings of 15 billion euros in the medium term.
Volkswagen’s vehicle production in Dresden, the capital of the state of Saxony, will be stopped by the end of next year. The Osnabrück factory will be sold.
Two of the four assembly lines in Wolfsburg will also be closed and 4,000 people will be laid off by 2030.
Volkswagen has been meeting with union representatives since September about measures it said were needed to compete with Chinese manufacturers and combat falling demand and slower-than-expected adoption of electric vehicles in Europe. It was noteworthy that in the fifth round of talks, after 70 hours of negotiations, an agreement was reached before the Christmas holiday.
Volkswagen terminated the company’s 30-year employment guarantee in September.
Last month, Volkswaen employees staged two of the biggest strikes in the German company’s history to protest the company’s cost-cutting plans.
According to the German press, the biggest sticking points in the negotiations between IG Metall and Volkswgaen management were questions regarding cost targets, locations and their occupancy rates, as well as job guarantees.
IG Metall and Volkswagen Workers’ Council had repeatedly stated that they would not accept the closure of factories and mass layoffs.
SUSTAINABLE SOLUTIONS
Volkswagen Group Chief Executive (CEO) Oliver Blume, in his assessment on the subject, said, “With the agreed package of measures, the company has determined a decisive route for the future in terms of costs, capacities and facilities. “We are now back in a position to successfully shape our own destiny.” he said.
Volkswagen Chief Executive (CEO) Thomas Schaefer also described the decisions taken last night as a difficult decision and stated that these decisions also set an important route for the future.
“We had three priorities in the negotiations,” Schaefer said. He stated that there are “sustainable solutions” for all three issues, using the expressions “reducing excess capacity in facilities in Germany, reducing labor costs and reducing development costs to a competitive level.”
Volkswagen Business Council President Daniela Cavallo said, “No location will be closed, no one will be laid off for operational reasons, and our company wage agreement will be secured in the long term.” He emphasized that it is balanced with job security.
