Volkswagen reached a deal with IG Metall to prevent plant closures in Germany and avoid forced redundancies.
Germany’s largest carmaker had previously warned of potential factory closures to reduce costs. The agreement prevents closures, secures future investments, and avoids layoffs for operational reasons.
Job Cuts and Adjustments Under the Agreement
Volkswagen and IG Metall agreed to cut over 35,000 jobs in Germany by 2030, reducing costs by €15bn (£12.4bn). These reductions will be achieved through early retirements and other socially responsible measures.
Negotiations began in September and concluded after lengthy discussions. IG Metall’s works council chief, Daniela Cavallo, celebrated the agreement, saying, “No site will close, and our wage agreement is secure.”
Despite this, production capacity will reduce across plants. VW will also suspend a previously agreed 5% wage increase in 2025 and 2026 to support the company’s transformation.
The company plans to reduce annual apprenticeships from 1,400 to 600 starting in 2026 and explore shifting some production to Mexico. Options for its Dresden and Osnabrueck sites are under consideration.
Response to Economic Challenges
Volkswagen faced declining demand in China and growing competition from Chinese brands in Europe. Factory closures would have been unprecedented in VW’s history.
During talks, 100,000 workers staged warning strikes across Germany to pressure management. Negotiators aimed to settle the matter before Christmas.
Volkswagen Group CEO Oliver Blume described the deal as “an important signal for the Volkswagen brand’s future viability.” German Chancellor Olaf Scholz welcomed the agreement, calling it a “good, socially acceptable solution.”