Agreement with works council: VW could cut thousands more jobs

Agreement with works council
VW could cut thousands more jobs

Volkswagen wants to continue cutting jobs. To this end, the company is agreeing a new savings program with the works council. It contains a comprehensive age regulation package as well as an extension of the hiring freeze until the end of the year.

Volkswagen has agreed on further steps to cut jobs with the carmaker's works council. Accordingly, existing offers for partial retirement will now also be opened for those born in 1964. In addition, older employees are to be offered new offers for early retirement. This was announced by Volkswagen AG in Wolfsburg.

How many jobs are saved in this way depends on how many employees ultimately accept the offers. In an internal employee information sheet that is available to the German Press Agency, the works council calculates that "a low four-digit number of employees" could stop with the additional partial retirement programs.

According to a report by the "Handelsblatt", which refers to corporate groups, up to 5000 jobs are expected to be available. Experience has also shown that up to 900 employees could retire at short notice with the new early retirement regulations. A VW spokeswoman and a spokesman for the works council unanimously emphasized that this was not a new round of job cuts.

Since the group is compensating part of the pension gap for employees who are leaving early, the downsizing would result in additional costs. For this, half a billion euros would now be set, reports the "Handelsblatt", citing corporate circles. In return, Volkswagen will save billions in the coming years because personnel expenses will then be lower. In addition, the carmaker is extending the hiring freeze that has been set until the end of the first quarter until the end of the year. Only in important future areas such as IT and software should new employees be brought in from outside.

Fixed costs should be reduced

The background to the resolutions is the so-called "fixed costs program", with which fixed costs in the company should fall by a total of five percent by 2023. Before Christmas, the VW supervisory board had principally given backing to CEO Herbert Diess for this project. As a stage victory for the works council, the management's commitment to implement possible new savings only within the framework of existing programs was considered a milestone.

At Volkswagen, jobs can only be cut in a "socially acceptable way" because the company will secure jobs until 2029. "The company and the works council agreed at the end of 2020 to implement further savings efforts by 2023," writes the works council. "The regulations explained here will initially only apply until the end of 2021."

The current agreements also include an extension of the so-called "Level Freeze" program, which is used to freeze upper staff limits. This is an "important lever to accelerate the internal transformation of the company, since the positions must first be filled via the internal labor market".

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