November 01, 2024 – According to Reuters, Volkswagen has requested a 10% pay cut from its German employees on Wednesday, citing it as the only way to save jobs and maintain competitiveness amid falling profits and threats of strikes from the labor union.
The company, which is facing a three-year low in profits, has not provided a clear response regarding the potential closure of its German factories, a first in Volkswagen’s 87-year history. However, labor representatives have indicated that this option remains on the table.
“We urgently need to reduce labor costs to maintain our competitiveness, and this requires contributions from our workforce,” said Arne Meiswinkel, the head of human resources at Volkswagen brand leading the negotiations.
Volkswagen Group released its third-quarter 2024 results on October 30th, showing a slight decrease in revenue of 0.5% to 78.48 billion euros (currently equivalent to approximately 607.716 billion Chinese yuan) and a significant 42% drop in operating profit to 2.86 billion euros (currently around 22.147 billion Chinese yuan).
On the same day as the earnings announcement, the company engaged in a second round of intense negotiations with the labor union regarding wages and the broader future of the company. Both parties agreed to continue discussions and will meet again on November 21st. However, worker representatives criticized management for “poor decision-making” and demanded a 7% pay increase, threatening to strike from December unless the company explicitly rules out the possibility of factory closures.
It’s worth noting that Volkswagen announced in September its consideration to shut down its vehicle production and parts factories in Germany as a cost-cutting measure. As part of this initiative, the company decided to terminate a 30-year-old job security agreement that was originally designed to protect jobs until 2029, but will now end in the middle of next year.
Daniella Cavallo, the chair of Volkswagen Group’s works council, revealed on October 28th that the company plans to close at least three factories located in Germany and lay off tens of thousands of employees.
