Cars stand at a Volkswagen dealership on October 10, 2024 in Berlin, Germany.
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Volkswagen is considering widespread pay cuts and layoffs as well as the closure or size reduction of its plants in Germany, the company’s works council said Monday.
The Volkswagen management recently presented plans to the council that include a 10% reduction in pay across the board, as well as wage freezes in 2025 and 2026, according to Daniela Cavallo, head of the works council. All factored in, the body estimates workers will suffer pay cuts of around 18% over the period.
Workers with certain collective wage agreements would also lose bonuses and additional payments on employment anniversaries, said the works council, which is made up of a group of elected staff members that represent the interests of a company’s workforce.
Volkswagen also intends to shut three factories and downsize all other plants in Germany, Cavallo said.
“In concrete terms, this means taking out even more products, volumes, shifts and entire assembly lines far beyond to what we have already done,” she said in a statement released Monday. “All German VW plants are affected by this. None of them are safe,” Cavallo added.
She warned that sweeping job cuts were part of carmaker’s plans, noting that tens of thousands of jobs were at risk.
Employees of German car maker Volkswagen (VW) attend an information event by workers’ representatives focusing on their management’s latest savings proposals, on October 28, 2024 at the company’s headquarters in Wolfsburg, northern Germany.
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The council further said that Volkswagen was planning to outsource some of its departments to either external companies or to the carmaker’s locations abroad.
CNBC has reached out to Volkswagen for comment.
Volkswagen woes
The Volkswagen management presented its plans to the works council separate from ongoing discussions about labor agreements, the council said. The next round of these talks is set to take place on Wednesday this week, when Volkswagen is also due to release its latest quarterly earnings.
Volkswagen in September had warned of potential plant closures and said it was scrapping a slew of labor agreements. This includes agreements with employees with specialist or leadership positions, temporary workers and apprentices.
The company also said it would end its employment protection agreement, which has been in place for its German workforce since 1994.
The announcements have been met with strong resistance from the works council and top German union IG-Metall.
This is a developing story and will be updated.