Title: VW Anticipates Billions in Long-Term Wage Savings
Title: VW Anticipates Billions in Long-Term Wage Savings
Volkswagen's upcoming savings plan, following the wage agreement, includes a long-term reduction of 6% in wages, as per internal company communications. This figure serves as a preliminary target, with the detailed analysis of the wage structure yet to commence. The current workforce can rest easy, as extensive protection of acquired rights has been agreed upon, preventing immediate wage cuts.
Volkswagen, Europe's largest carmaker, aims to lower its labor costs by 1.5 billion euros annually, which is already evident in the forfeit of bonus payments and wage increases. In exchange, the company has extended employment security until 2030. The planned job reduction of 35,000 positions will now occur without operational dismissals.
The wage agreement, sealed just before Christmas, also includes a restructuring of the current company wage, aiming to align it with the lower area wage prevalent in the industry. By the end of 2025, an analysis of the current wage structure will commence, comparing it to that of other companies. Negotiations with IG Metall on the new structure, effective from 2027, will follow in 2026.
Unfazed by the potential job cuts, Volkswagen's strategy revolves around long-term cost reduction and stabilization. Managers can expect significant bonus cuts over the coming years, while a proposed 10% salary reduction at the core brand could potentially generate around 800 million euros annually. Volkswagen anticipates saving approximately 2 billion euros yearly, with the restructuring plan aiming to contribute half of the targeted savings of 4 billion euros.
The company's restructuring plans also involve reducing technical capacity by approximately 730,000 vehicles in Germany, which will contribute to the overall cost savings. This will be achieved through voluntary departures, early retirement programs, hiring freezes, and reduced apprenticeships, with forced redundancies excluded until December 2030.
The restructuring plan's financial impact is expected to show short-term cost effects of around 1.5 billion euros annually, rising to mid-term cost effects exceeding 4 billion euros annually. The long-term goal is to save over 15 billion euros by 2030. By enhancing competitiveness and ensuring factory cost targets, Volkswagen aims to support future investments and profitability targets.
The German car manufacturer, Volkswagen, is aiming to reduce its labor costs by aligning its company wage with the lower industry average, as part of its restructuring plan. By 2030, Volkswagen's managers and employees at the core brand may face proposed salary reductions, contributing to potential annual savings of 800 million euros for the company.