Volkswagen is contemplating significant job reductions, salary cuts, and possible plant shutdowns throughout Germany as part of its cost-cutting measures, as reported by the company’s works council. Recently, the automotive manufacturer outlined proposals that involve a 10% salary reduction for the entire workforce, alongside a wage freeze for 2025 and 2026, which could lead to the closure or scaling back of operations at several German facilities.
The works council, chaired by Daniela Cavallo, indicated that the suggested salary reductions could lead to an overall decrease of 18% for certain employees due to the elimination of various bonuses and extra payments. Beyond pay cuts, the council revealed that Volkswagen intends to close three plants in Germany while also reducing operations at all other locations, a move that puts thousands of jobs at risk.
Management at Volkswagen, including Human Resources Chief Gunnar Kilian, has asserted that these measures are crucial in light of rising costs and the necessity to remain competitive. The automaker attributes its challenges to increasing energy, material, and labor expenses, explaining that its German plants are becoming less efficient compared to their rivals.
Kilian stated, “Without these changes, future investments may not be financially possible,” stressing that the modifications are aimed at preserving Volkswagen’s long-term viability.
Opposition to these proposals has been voiced by the German union IG Metall. Lead negotiator Thorsten Gröger labeled the plans a “betrayal” of Volkswagen’s loyal workforce, cautioning that should the company pursue these strategies, it could face backlash from union members.
Volkswagen, alongside fellow German automakers, is struggling to adapt amid the industry’s shift to electric vehicles and a decelerating global economy. The company has adjusted its financial forecasts twice this year and modified labor agreements for certain employee demographics, including apprentices and temporary staff. Furthermore, Volkswagen aims to abolish its employment protection agreement that has been in effect since 1994.
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