10 percent salary cuts
Arne Meiswinkel, chief negotiator for Volkswagen, announced that the plan assumes 10%. salary cuts and revision of the bonus system. These actions are intended to strengthen the company, which is struggling with weak demand in Europe and increasing competition on the automotive market from China.
Volkswagen, as well as trade union leaders, warned that the plan to close factories may turn out to be realistic if an agreement cannot be reached with employees regarding the cuts.
“We are open to any discussion to achieve our financial goals,” Arne Meiswinkel commented to reporters during Wednesday’s meeting in Wolfsburg, where the company’s headquarters are located. Even after discounts, remuneration the company’s employees will remain “highly attractive,” he added.
Poor financial results
A few hours before the negotiations Volkswagen reported financial results for the last quarter, and this quarter was the worst in many years. This state of affairs reinforced the reasons why the company should take drastic steps in its operations in Germany. Earlier this week, trade union leaders signaled that both a 10% pay cut and closure of at least three factories in Germany.
The last proposal is a manifestation of the “first small signal” of improvement in the situation, says Daniela Cavallo, one of the trade union managers. She added that the option of closing factories was still on the table and workers remained “alarmed.”
Trade unionists have long been opposed to changes within the company, which has failed to launch several electric car launches in a row. Additionally, VW is struggling with low profits.
Demand has still not returned to pre-pandemic levels
Declining sales in China and increasingly fierce competition in Europe – which has not yet returned to pre-existing demand levels pandemic – contributed to the decline in the group’s profits. The VW brand, which will suffer most of the cuts, generated only 2.1%. operating margin in the first nine months of the year.
While the IG Metall trade union demanded wage increases, Arne Meiswinkel believes that reductions are necessary to increase the brand’s profitability. The company’s wage cut plan must be met in order to continue talking about issues such as factories and jobs, Meiswinkel adds.
“Only if we find solutions together to achieve our financial goals can we imagine concrete prospects for German factory locations and job security,” he explained.
Further negotiations
Volkswagen’s proposals in the field wage cuts are to begin more complex negotiations, the next round of which is scheduled for November 21, 2024. The union’s grace period expires at the end of November, and then – in the event of no agreement – warning strikes are possible from December 1.
