The leading European automobile group unveiled, this Monday, October 28, the outlines of a colossal new social plan, with a view to saving 4 billion euros. Bonuses and seniority bonuses would also be threatened.
Volkswagen is changing completely. The European automobile giant unveiled, this Monday, October 28, the drastic measures of its social plan, effectively repealing the employment guarantee agreement in force for thirty years (and valid until 2029) for German employees. The rumor has been circulating for several weeks, it is now accepted: for the first time in its history, the German brand will close factories – “at least three” for now – in his home country. The manufacturer’s works council, which denounces a social plan “historical” aiming to make “bleed white” the manufacturer’s sites, also announced that management was considering the elimination of tens of thousands of jobs in Germany.
Wage freeze
In its ambition to achieve 4 billion euros in savings, Volkswagen is not stopping there. The plan provides for the reduction of all salaries by 10% and their freezing in 2025 and 2026, it was indicated in a press release. Management also speaks of transfers abroad of many activities and departments of the group, currently based in Germany. The president of the works council, Daniela Cavallo, also revealed to employees that the board of directors plans to “reduce all remaining factories”, that is to say, reducing the quantity of vehicles produced, the size of teams, etc. Entire assembly lines are threatened. “None is safe,” she proclaims.
Despite a net profit of 17.9 billion euros in 2023, up thanks to a rebound in car sales, the group had justified this social plan by the fall in purchases since the Covid-19 pandemic, and Chinese competition in the electric automobile market. But it is above all the high labor costs, above the sector average, which bother the manufacturer.
Other measures are being reported in the German press: the economic daily Handelsblatt mentions a reduction in bonuses reserved for the highest salaries and another on bonuses linked to seniority. According to the newspaper, Volkswagen management hopes for savings of 4 billion euros at the end of its plan. But the employees do not intend to let this happen: their representatives, who have decision-making power over the group’s strategy, will begin negotiations. “The next meeting for salary discussions is set for Wednesday and it is a fact that Volkswagen is at a pivotal moment in its history, the situation is serious and the responsibility of the social partners is enormous,” assures an employee spokesperson.
“Mass unemployment”
In Berlin, Chancellor Olaf Scholz, through one of his spokespersons, warned of a wave of layoffs. The government wants to wait for Volkswagen management to decide but “the chancellor’s position is clear, namely that employees must not suffer the impact of possible bad decisions taken by management [de Volkswagen] in the past and that the priority must now be to preserve jobs”, said Wolfgang Büchner. Volkswagen’s planned plans come as the German economy is floundering with recession and rising unemployment, contributing to the government’s strong unpopularity.
Daniela Cavallo wanted to warn management: “don’t mess with us, […] you are very close to climbing!”. She was also indignant at the “firm intention” of Volkswagen to cause a “mass unemployment” within the brand which employs 120,000 employees in Germany.
“And [Volkswagen] confirms its dystopian path on Wednesday, the board of directors must expect consequences,” also warned the powerful German union IG Metall, which for its part is pleading for a 7% wage increase over one year and better pay for apprentices, demands which remain very far from the views of management. Strikes will be possible after the mandatory social dialogue period, i.e. from December.
