Volkswagen has finalized a deal with the IG Metall union to cut 35,000 jobs by 2030, saving €15 billion. The agreement avoids plant closures and maintains wage stability. Despite restructuring, Volkswagen secures its future in a tough global market.
Volkswagen has reached an agreement with the IG Metall trade union that will prevent German plant closures and avoid compulsory redundancies. The deal secures long-term job stability and upholds wage agreements, despite a challenging economic landscape.
Job Cuts and Restructuring Measures
Under the new agreement, Volkswagen has committed to reducing its workforce by more than 35,000 jobs across Germany by 2030. The job cuts are expected to save the company €15 billion (£12.4 billion) and will primarily occur through early retirement programs and other voluntary measures. Additionally, the number of apprenticeships will be reduced from 1,400 to 600 annually, starting in 2026.
Although the agreement ensures no forced layoffs, it also includes a reduction in production capacity and the relocation of some operations to Mexico. Volkswagen is also exploring alternative options for the Dresden and Osnabrück plants, which are part of the company’s broader restructuring strategy.
A Complex Negotiation Process
The negotiations, which began in September, were marked by significant tension, including “warning strikes” in which over 100,000 workers participated to put pressure on Volkswagen management. After several months of tough discussions, union leaders hailed the deal as a “rock-solid solution” that was achieved under difficult conditions.
One key aspect of the agreement is the union’s decision to suspend a 5% wage increase for 2025 and 2026. This measure aims to support Volkswagen’s transformation efforts and ensure the company’s future competitiveness. Daniela Cavallo, head of IG Metall’s works council, emphasized that while wages were temporarily frozen, securing investment for the company’s long-term viability was essential.
Challenges in the Global Market
Volkswagen is facing multiple challenges, particularly in the Chinese market, where demand for its vehicles has been declining. At the same time, Chinese automakers are becoming increasingly competitive in Europe, further straining Volkswagen’s position.
The threat of factory closures was seen as a serious risk, as it would have marked the first time in Volkswagen’s history that it shut down manufacturing plants in Germany. This potential outcome was avoided through the successful negotiations, and VW Group CEO Oliver Blume expressed that the deal is a “vital signal for the future viability of the Volkswagen brand.”
German Chancellor Olaf Scholz also praised the agreement, calling it a “good, socially acceptable solution” that balances the needs of both the workforce and management.
Conclusion
Negotiators worked to finalize the deal before Christmas, providing clarity and stability for both employees and management at Volkswagen. Despite the challenging economic environment and the shifting dynamics in the global automotive market, the agreement ensures that Volkswagen can continue its transformation while preserving jobs and wages for the long term.
