Volkswagen is facing potential widespread job cuts, pay reductions, and plant closures across Germany as it looks to reduce costs, according to the company’s works council. The automaker recently presented plans that include a 10% pay cut for all employees, freezing wages for 2025 and 2026, and possibly closing or reducing operations at multiple German facilities.
The works council, led by Daniela Cavallo, stated that the proposed cuts would result in an 18% pay decrease for some workers due to the loss of various bonuses and additional payments. In addition to pay cuts, the council reported that Volkswagen is planning to shut down three German plants, while downsizing operations at all others, putting thousands of jobs at risk.
Volkswagen’s management, including Human Resources Chief Gunnar Kilian, stated that these changes are essential due to rising costs and the need to keep up with competitors. The company cites increased energy, material, and labor costs, and claims that German factories are less cost-efficient than those of its competitors.
“Without these changes, future investments may not be financially possible,” Kilian explained, emphasizing that the adjustments aim to maintain Volkswagen’s long-term strength.
German union IG Metall strongly opposes these plans. Lead negotiator Thorsten Gröger criticized the proposals as a “betrayal” of Volkswagen’s dedicated employees, warning that if Volkswagen continues with these plans, they will face resistance from union members.
Volkswagen, alongside other German car manufacturers, has been struggling to keep up amid the industry’s transition to electric vehicles and a slowing global economy. The company has already revised its financial outlook twice this year and cut labor agreements for specific employee categories, apprentices, and temporary workers. Additionally, Volkswagen plans to end its employment protection agreement that has been in place since 1994.
Volkswagen’s quarterly earnings and further discussions with the works council are expected later this week.