FRANKFURT, Sept 10 (Askume) – Volkswagen (VOWG_p.DE) said on Tuesday it would cancel several labour agreements at six German plants that include job guarantees until 2029, raising the possibility of layoffs from next year.
Europe’s top automaker is scrapping a decades-old job guarantee as part of cost-cutting measures, fuelling a confrontation with workers as Volkswagen struggles to compete with low-cost Asian rivals.
The move comes after Volkswagen threatened to close its German factories for the first time in its 87-year history, a threat that shocked the global auto industry and raised concerns among top German government officials.
“We need to enable Volkswagen to reduce costs in Germany to a competitive level so that we can invest resources in new technologies and new products,” the company’s labor director Gunnar Kilian told a news conference.
Kilian said Volkswagen was willing to engage in wage negotiations to resolve the uncertainty surrounding the collective bargaining agreement.
Such talks were originally scheduled to begin in mid-to-late October, with the strike likely to begin in late November, but the works council has called for negotiations to begin this month.
The chairman of the company’s works council has strongly opposed job cuts and plant closures, blaming management for Volkswagen’s problems .
The IG Metall union had previously said it could consider a four-day working week as an alternative to a strike, which would emulate the cost-cutting drives of the 1990s.
Volkswagen’s troubles come at a time when economic uncertainty, sluggish growth, high energy prices and troubled trade relations with the lucrative Chinese market are testing Germany’s model of consensual industrial relations .
If the two sides fail to reach an agreement by June next year, the 1994 labour agreement will come into force – which works council president Daniela Cavallo called “crazy” in a statement to workers – which will result in the closure of the six factories and pay increases for workers.
According to an article published in the works council’s internal newsletter, the additional wage component of labour agreements prior to 1994 included Christmas bonuses, additional holiday pay, and higher overtime bonuses.
However, the layoffs would also be the first in decades for operational reasons.
“A negotiated solution is really needed, otherwise Volkswagen will be able to start compulsory layoffs in the summer of 2025, but at the same time the costs for the employees who remain will immediately increase significantly,” the works council said in its article. “Will have to cope.”
