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Forgive readers of the blog that the most pressing media issues in our country are not the subject of attention in order to focus on some interesting events that are taking place outside our borders. It is an event that was unthinkable years ago, the entry into crisis of the powerful multinational Volkswagen, a company linked to the Germany brand and which, like the country in general, faces a very complicated panorama against which, as usual, resorts to “variable adjustment” of its production in the form of surplus personnel and salary reductions at headquarters, together with possible relocations of the group’s products to other countries. The problem is that it affects a true business giant, with a very strong union density and where the metal federation of the DGB, the IG Metall, has to show its collective power.
In this blog we are going to address this conflict because it is very relevant to the understanding of the different economic frameworks in Europe that are being designed based on the energy and supply crisis that the war in Ukraine has caused and that especially affects Germany, and of which this crisis at Volkswagen represents an important sign. In a future entry we will address in detail the problem of collective bargaining of the different collective agreements due to different periods of ultra-activity, in order to in this first installment give an account of the vision of the conflict due to the note from the Volkswagen Central Works Committee.
Germany’s largest industrial giant is shocking its workforce with a cutback plan of historic dimensions
Wolfsburg – Germany’s largest industrial giant, Volkswagen, is shocking its workforce at VW’s domestic plants with a cutback plan of historic proportions: in exchange for the loss of jobs for tens of thousands of employees in its own country, The Board of Management wants to close at least three VW factories, reduce the size of all remaining plants, divest core areas and, on top of that, make steep pay cuts for the remaining employees.
The Board of Directors has recently presented these plans to the General Works Council as its option to emerge from the crisis, in talks independent of VW’s internal round of collective bargaining. As the management continues to refuse to inform the workers, local workers’ representatives contacted them at parallel meetings held at VW’s ten German sites (Brunswick, Chemnitz, Dresden, Emden, Hannover, Kassel, Osnabrück, Wolfsburg , Salzgitter and Zwickau). According to the first figures, tens of thousands of colleagues attended these meetings.
The President of the General Company Committee, Daniela Cavallo, He spoke on the main floor of Wolfsburg. The Board of Directors wants to close at least three VW factories in Germany. He claims he cannot move forward without that cut. The Board of Management also plans to reduce the size of all remaining plants in Germany. “Concretely, this means eliminating even more products, volumes, shifts and entire assembly lines, much more than we have already done.” Cavallo emphasized: ‘All German VW plants are affected by this. “None is safe.”
And he added: «The Executive Committee wants even more: it also wants to get rid of entire departments and divisions. And move the work done there abroad or outsource it completely to external service providers. This outsourcing would affect all types of work, regardless of whether it is semi-skilled work or qualifications with a university degree. This means that none of us can feel safe here. The president of the works council warned of the danger of dismissing the employer’s plan as a “tactic in the round of collective bargaining.” It is the plan of the largest German industrial group to begin liquidation in its country of origin. (…) These plans of the Board of Directors put tens of thousands of jobs at Volkswagen in Germany at risk.
Workers will suffer salary cuts of around 18%
Under these plans, remaining employees would have to accept steep pay cuts. The Executive Committee wants to remove 10% of the monthly salary from all employees, regardless of whether they are covered by collective bargaining, the ‘Rate-Plus’ or the management salary. That 10% would be permanent. (…) But that’s not all: after that 10% cut, there will be two rounds of salary freezes. So there will be no salary increase in 2025 and 2026,” said the president of the works council.
In addition, the company also wants to eliminate the current monthly bonus of 167 euros agreed in collective bargaining. The result would be the following calculation for a standard worker’s salary in production: 3,914 euros of monthly salary plus the bonus of 167 euros = 4,081 euros, which means that the 167 euros correspond to around 4 percent of the monthly salary. That plus a 10% reduction plus two years of wage freeze with a target inflation rate of 2% (ECB target) = a loss of around 18%. Depending on the weight of the 167 euros, this value fluctuates slightly by salary category.
The Board of Directors also wants to abolish the bonus linked to management in the “Tarif-Plus” – which corresponds to the level immediately below that of staff below that of management, which is determined in collective bargaining with the union interlocutor, IG Metall . In addition, the one-time payments for 25 and 35 years of service guaranteed in the VW collective agreement “Manteltarif” would be cancelled.
Cavallo reiterates his criticism of the Board of Directors: there is still no indication of a future plan
In her speech before thousands of people on the Südstraße (South Road) of the main plant, the president of the works council reiterated her criticism of the lack of concept and strategy with which the management leadership of Europe’s largest automobile manufacturer has been working for months. without showing any idea beyond the plans to cut staff and production: «The Board of Directors panics you, colleagues, and then disappears. For more than a year, the Board of Management has not provided us with the objectives for the VW core brand. The Council does not comply with the agreements, not even those of the planning round, the value of which cannot be greater here in the Group. And above all, two months after we vehemently demanded it, the Council still shows no sign of a plan for the future. Because the question of all questions remains unanswered: What are these cuts for, if there is no sign of certainty on the other side? When there is still no plan of attack on the table, no concept for the future product portfolio and no idea of how we can regain our technological leadership. And thus the President of the General and Group Works Committee concluded: The Executive Committee is against us. (…) And, therefore, he is playing with the enormous risk that everything will soon escalate here. And by that I mean that we will break off the conversations and do what a team has to do when they fear for their existence.’
Cavallo referred to the upcoming second round of internal negotiations. Top executives can take advantage of this atmosphere on Wednesday to finally speak out on all this. Of course, you can do it today too. Or tomorrow. The main thing is that they finally do it.’
The works council does not fail to recognize the problems: politicians must also act
The chairwoman of the general and group works council emphasizes that co-management at VW largely shares the analysis that there is a pressing need to act, but that a unilateral austerity program will not change anything if there is no recognizable concept for the future : «Of course, in the works council we also know how the situation is at the moment. It is serious throughout the sector. We have serious problems. We have to address them at Volkswagen. In the works council we have often stressed this. We are not far away when it comes to analyzing the problems. “But we are miles apart in our response to the problems.”
He also addressed politicians: «They have to wake up. It is not enough to say that they support VW workers. We need action. We need politicians to come up with a comprehensive plan to get BEV mobility off the ground once and for all. And we also need a master plan for Germany as an industrial location. These are simply “future perspectives”.
At the end of his speech, Cavallo once again urged management to explain itself. On Wednesday (October 30), employers and unions will meet for the second round of negotiations for VW’s new internal collective agreement. The interlocutors will negotiate at the Volkswagen Arena (VfL stadium) in Wolfsburg.
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