Germany: vast savings and job cuts plan agreed at Volkswagen but it is not a panacea

Following historic negotiations, the IG Metall trade union, the central works council and Volkswagen management agreed on Friday 20 December on major cost-cutting measures and significant workforce reductions at German plants. The programme includes the gradual elimination of 35,000 jobs, a pay freeze until 2030, the closure of at least one plant and the reallocation of production activities between sites. Once again, the social partnership has worked. But many obstacles remain.

At the end of the “longest negotiations in the history of the Volkswagen group” (four meetings and 70 hours for the final negotiations), the social partners of the VW brand found a compromise three days before Christmas for a crisis agreement that will see the automobile giant’s Dresden plant close as well as a massive reduction in the manufacturer’s German workforce (currently 120,000 employees). The agreement, however, avoids outright redundancies and a general reduction in wages of 10%, and reintroduces an agreement on job security until 2030. All of this is to be made possible by a wage freeze and major restructuring at the manufacturer’s 10 German plants,…

Thomas Schnee

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