There Volkswagen took a very significant decision that will have a negative impact especially for workers. It was the same IG Metal (German trade union) to announce that it has received a letter from the Wolfsburg company letter of cancellation regarding many collective agreements. In fact, among them, there is an agreement that explicitly protects German jobs and factories until 2029.
There Volkswagen he decided to to end its safeguard contract with the German union IG Metala move that could mark a major turning point in the relationship between the company and its workers. This contract, in force since 1994, guaranteed the protection of jobs and German factories until 2029, and has been renewed several times in recent decades.
This decision has caused great concern among the unions. Daniela Cavallo, chairwoman of the works council and member of the supervisory board of Volkswagen, has strongly criticized the decision, calling it a “historic attack” on workers, promising that there will be no redundancies without strong union opposition. In fairness, Cavallo stated the following:
“We will defend ourselves firmly from this historic attack on our jobs. With us there will be no redundancies“.
Volkswagen’s motivations
On the corporate side, HR Manager Gunnar Kilian explained that Volkswagen was forced to take this measure due to the current economic difficulties, with the end last to save from 5 to 10 billion euros and make the company more competitive for the future. The termination of the contract, which expires at the end of 2024, will give Volkswagen the opportunity to plan cuts and reorganizations, especially in factories considered less productive. The manager said:
“This period will give us the opportunity to work with employee representatives to find solutions on how to make Volkswagen competitive and fit for the long-term future.“.
Despite the tension, the automaker announced its intention to negotiate a new agreement by 2025.
Meanwhile, IG Metall district director and chief negotiator Thorsten Gröger believes that there will certainly be strikes and demonstrations.
Volkswagen, a decision that will have many repercussions
The conclusion of the safeguard agreement between Volkswagen and IG Metall is a major event for the German automotive industry and industrial relations. This agreement, signed in 1994 and renewed several times, guaranteed the protection of German jobs and factories (until 2029). Volkswagen’s decision to end the agreement, announced in September 2024, is a clear signal of the financial and economic challenges the company is facing.
The breakdown of the agreement leaves room for possible layoffs, because after the current contract expires at the end of 2024, the company will be free to reduce its workforce or close factories deemed less productive. This scenario directly involves approximately 120,000 workers distributed in 10 factories in Germany.
From the company’s point of view, the resolution is considered necessary For allow to Volkswagen Of better address the current economic difficultiesincluding a significant drop in sales, with around half a million fewer vehicles sold, equivalent to the production capacity of two factories. Added to this is the need to save between 5 and 10 billion euros, as reported by management.
Volkswagen, in fact, has to deal with increasing costs and the transition towards electrification and digitalization, areas in which competition is “fierce”. The decision to terminate the contract can be interpreted as an attempt to gain greater flexibility in future negotiations with the unionwith the aim of reducing operating costs and improving the group’s competitiveness.
The situation represents a turning point in industrial relations in Germany, not just for Volkswagen, but for the entire automotive industry, which is facing similar pressures. Other major suppliers, such as Bosch, Continental and ZF, are also under pressure to reduce costs due to technological and market changes.
The next step will be a series of negotiations between the company and the union to find a new agreement by mid-2025, but the path appears complex and full of unknowns.
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