News Summary:
- Volkswagen strikes a deal with IG Metall to avoid plant closures in Germany, ensuring long-term job security.
- Over 35,000 jobs will be cut by 2030 through early retirement options to save €15 billion, with wage adjustments.
- The agreement reduces apprenticeship spots and shifts production plans, while union leaders celebrate the outcome.
Volkswagen has reached a deal with the IG Metall union to avoid plant closures in Germany. The agreement prevents immediate compulsory redundancies and ensures long-term job security while enabling future investment.
Job Cuts and Wage Adjustments to Save Costs
Under the agreement, Volkswagen and the union will cut over 35,000 jobs across Germany by 2030. The reductions will be implemented in a “socially responsible manner,” including early retirement options, to save €15 billion (£12.4 billion).
Germany’s largest carmaker had warned it might close plants for the first time to reduce costs. After tough negotiations since September, IG Metall confirmed they found a solution to secure jobs and sustain investments.
Volkswagen considered shutting three factories and asked workers to accept a 10% pay cut. The union initially demanded a 7% pay increase, but the deal suspended a planned 5% wage rise in 2025 and 2026.
The agreement also reduces annual apprenticeship positions in Germany from 1,400 to 600 starting in 2026. Volkswagen will explore shifting some production to Mexico and alternative uses for its Dresden and Osnabrueck sites.
Challenges and Reactions to the Deal
Volkswagen has faced declining demand in China, a crucial market, and rising competition from Chinese brands in Europe. During negotiations, 100,000 workers staged warning strikes to pressure management.
Union leaders celebrated the deal despite production cuts. Daniela Cavallo, IG Metall’s works council chief, stated, “No site will be closed, no one will be laid off for operational reasons, and our wage agreement is secure.”
Volkswagen’s CEO Oliver Blume called the agreement “an important signal for the Volkswagen brand’s future viability.” German Chancellor Olaf Scholz praised it as a “good, socially acceptable solution.”
The negotiations concluded just before Christmas, ending months of uncertainty for workers and management. Factory closures in Germany would have been unprecedented in Volkswagen’s history.