According to Reuters, on November 21, Volkswagen Group, Europe's largest automaker, failed to reach a breakthrough in wage negotiations with Germany's IG Metall union, which also addressed an unprecedented plan to shut down some of the company's German factories. The union announced plans to strike at Volkswagen's German plants starting December 1.
IG Metall had urged Volkswagen to take a "significant step forward" during the third round of negotiations, but the union stated that both sides remained far apart by the end of the talks.
Volkswagen employs about 300,000 people in Germany, with 120,000 working in six factories under a separate collective wage agreement. Thousands of employees gathered during the negotiations to discuss wage-related issues.
The union pointed out that while it proposed saving €1.5 billion through measures such as reduced working hours and the forfeiture of bonuses, Volkswagen's management raised concerns without presenting new counterproposals. However, both parties agreed to resume negotiations on December 9.
On November 20, IG Metall stated that it was willing to accept reduced working hours to preserve jobs and proposed allocating part of the previously planned wage increases and bonuses for 2025 and 2026 into a "future fund."
Volkswagen, on the other hand, proposed a 10% pay cut, citing intense competition from China and declining car demand in the European market. The company argued that it needed to cut costs and increase profitability to maintain its market share, even considering factory closures in Germany for the first time in its history.
Volkswagen expressed appreciation for the workers' willingness to discuss reducing labor costs and production capacity but emphasized that any wage agreement must ensure "sustainable financial relief."
Arne Meiswinkel, Volkswagen's Head of Human Resources for the brand, stated:
"In this challenging phase for the German automotive industry, ensuring Volkswagen Group's competitiveness and consistently achieving financial targets remains critical."
Thorsten Groeger, IG Metall's lead negotiator, commented:
"Volkswagen is legally entitled to evaluate our proposals, but the company has also made it clear that the possibility of closing German plants and implementing large-scale layoffs has not been ruled out."
Groeger hinted at a willingness to explore selling Volkswagen's German factories to buyers outside the group to prevent layoffs and closures.
"For us, this is about ensuring the long-term future of all factories, securing jobs, and preventing layoffs," he said.
IG Metall also suggested reducing shareholder dividends, although it clarified that it did not seek a complete suspension of dividends but did not specify the amount.
A report by Stifel analysts noted:
"The union explicitly mentioned that Volkswagen's shareholders must contribute by adjusting the dividend policy." Claudia Jobe, a member of the labor council at Volkswagen's Hanover plant, remarked that since she joined the company in 1991, the management has shifted focus, prioritizing shareholders' interests over workers'.
The planned December strike would be Volkswagen's first large-scale labor action since 2018 when over 50,000 workers participated in demonstrations over wage disputes.
The strike is expected to begin as several hours of "warning strikes." Union members may later vote to extend these strikes to 24 hours or longer.
