Volkswagen is reportedly considering extensive job cuts and a 10 per cent salary reduction across its German workforce as part of a large-scale restructuring effort, according to information from the company’s works council. This plan includes the potential closure of three factories, as well as downsizing across all other German production facilities, raising serious concerns about job security for thousands of employees, according to a CNBC report.
Daniela Cavallo, Volkswagen’s works council head, disclosed that management has presented a wage freeze plan set for 2025 and 2026, which would result in an estimated 18 per cent total reduction in pay over the coming years. Additionally, employees covered by specific collective bargaining agreements may lose bonuses and other job-related benefits.
Cavallo stressed that the planned restructuring would affect every Volkswagen plant in Germany. “This means removing even more products, production volumes, shifts, and entire assembly lines far beyond what has already been cut,” she said, noting that no facility is expected to be unaffected by these changes.
In addition to pay cuts, Volkswagen is reportedly planning to outsource certain departments to external companies or move them overseas. These proposals have been discussed separately from current labour agreement negotiations. A critical meeting is scheduled for Wednesday, where Volkswagen will also share its latest quarterly earnings.
Acknowledging the difficult economic conditions, Volkswagen has stated that the restructuring is essential to maintain competitiveness. Chief Human Resources Officer Gunnar Kilian highlighted the need for these changes to secure the company’s ability to invest in the future. CEO Thomas Schäfer further explained that Volkswagen's revenue from car sales has been insufficient, and rising costs in energy, materials, and labour have hindered the competitiveness of German plants.
These developments have not gone unnoticed by the market, with Volkswagen’s stock dipping by 0.46 per cent on Monday. The automaker is grappling with a challenging transition to electric vehicles, combined with a cooling global economy, which led the company to reduce its annual outlook for the second time in three months due to weak performance in the passenger car segment.
In recent weeks, Volkswagen has also warned of potential plant closures and announced intentions to revoke several labour agreements, including those for specialized and temporary workers. The company plans to terminate an employment protection agreement from 1994, a move that has met with firm opposition from the works council and IG Metall, a leading German union.
