Volkswagen has successfully negotiated a deal with the IG Metall trade union, preventing the closure of factories in Germany and securing thousands of jobs amid financial pressures and declining sales. The agreement, finalized after months of tense negotiations, includes plans to reduce 35,000 jobs by 2030 without resorting to forced redundancies.
Instead, job cuts will be implemented through early retirement packages and voluntary departures, while production capacity will be scaled back to save €15 billion (£12.4bn).
Volkswagen had previously warned of possible factory shutdowns—the first in its history—due to mounting financial difficulties and declining demand in China, its largest market. The company had also faced rising competition from Chinese carmakers entering the European market, intensifying the pressure to cut costs.
The threat of closures prompted widespread concern, leading to protests and short strikes involving over 100,000 workers across the country.
Union leaders hailed the agreement as a victory for job security. Daniela Cavallo, IG Metall’s works council chief, emphasized that “no site will be closed, no-one will be laid off for operational reasons, and our company wage agreement will be secured for the long term.”
Key Provisions in the Deal
- Job Reductions:
- 35,000 positions will be phased out through early retirements and voluntary exits by 2030.
- Apprenticeships will be reduced from 1,400 to 600 annually from 2026.
- Wages:
- A 5% wage increase set for 2025 and 2026 will be postponed to support the company’s restructuring efforts.
- Production Shift:
- Volkswagen is considering relocating some manufacturing operations to Mexico to further cut costs.
- The company will review alternative uses for its Dresden and Osnabrueck facilities.
- Investment and Transformation:
- Funds saved through the deal will be redirected toward future technologies, including electric vehicles and sustainability initiatives.
The agreement has been welcomed by both the union and government officials. German Chancellor Olaf Scholz praised it as a “socially acceptable solution” that safeguards workers and preserves Germany’s industrial legacy.
Volkswagen’s CEO, Oliver Blume, described the deal as a “decisive step for the future viability” of the company, enabling it to remain competitive amid economic uncertainty and technological transformation.
The agreement between Volkswagen and IG Metall provides stability for German workers while enabling the company to implement critical cost-saving measures. With job cuts spread over six years and a focus on modernization, the deal ensures Volkswagen’s plants remain operational without immediate layoffs.
