Volkswagen workers offer to take pay cut as wage talks continue

German auto giant Volkswagen’s wage negotiations continue, as the third round of talks kicked off on Thursday, with only ten days left until the union-imposed deadline. After this, strikes may be held across several German production plants. 

The talks involve about 120,000 of Volkswagen’s employees in Germany, almost half of the total workforce in the country, which amounts to approximately 300,000. 

On Wednesday, the IG Metall labour union workers announced that they were willing to accept pay reductions, so that the company could continue to keep plants open and avoid mass layoffs. 

The Volkswagen workers’ council and the union put forward a proposal to cut labour expenses by €1.5bn. However, in exchange, they required a guarantee that the future of all Volkswagen’s German factories would be safe, along with job security guarantees. 

If the company does not agree to these demands, the workers could launch a significant strike from 1 December onwards. At present, Volkswagen has not yet agreed to cancel its plans to shut the German plants, which has increased the risk of strike action potentially going forward soon. 

The workers’ council has shared that this plan put forward by Volkswagen’s employees was in order to facilitate a mutually beneficial and sustainable solution which would not harm worker livelihoods, while also cutting the company’s losses. 

Volkswagen plans to close at least three German plants

Volkswagen, like several other European car manufacturers, is dealing with intensifying competition from Chinese rivals, slowing demand for electric vehicles (EVs), and the German economy lagging for the last several months. 

In October this year, the company revealed plans to shut down at least three German production plants, as well as cutting tens of thousands of jobs. It also demanded that the remaining workers accept a 10% pay cut. 

This followed Volkswagen’s second profit warning in less than three months, with Volkswagen also saying that it would be outsourcing entire divisions and several tasks to outside service providers. The plants which would still be in production would also be downsized. 

In October, when Volkswagen had called for employees to accept a 10% pay cut, Arne Meiswinkel, chief negotiator for Volkswagen AG, said in a press release on the company’s website: “We are very concerned about the current trend in the auto industry in Europe, and especially in Germany as a business location. 

“The deterioration in Volkswagen’s figures for the last quarter underline, particularly for the Volkswagen brand with a margin of only 2.1 percent, makes this particularly clear. If we remain at this level, we will be unable to finance our future.

“Successful operations are a prerequisite for job security. And that is our goal. So one of the things we need to do is reduce our labour costs.”

However, the workers’ council has proposed that one of the solutions to cut labour costs could be for upper management to forfeit their bonuses.