Cancellation of employment guarantees suggests potential layoffs at Volkswagen
Volkswagen is cancelling its long-standing employment guarantees at six German plants, Reuters has reported.
The employment guarantees ensure that employees at the German plants will remain employed until 2029, and their cancellation potentially means layoffs starting next year.
Gunnar Kilian, the company's labour director, highlighted the need to make Volkswagen more competitive in the global market.
"We must enable Volkswagen AG to reduce costs in Germany to a competitive level in order to invest in new technologies and new products with our own resources," Kilian said in the statement.
According to Reuters' report, the decision is part of the automaker's broader cost-cutting strategy as it faces increased competition from lower-cost Asian rivals.
Volkswagen's board gave notice of the cancellation to IG Metall on Tuesday, which the German union confirmed.
"These cancellations arrived seconds ago," IG Metall said in an emailed statement to Reuters.
Negotiated compromise needed
The move to scrap the decades-old agreements has sparked tension between Volkswagen and its worker representatives.
The IG Metall union has suggested reducing the workweek to four days, an approach similar to the strategy implemented during a cost-cutting initiative in the 1990s.
The company's works council also stressed the need for a "negotiated compromise."
"Otherwise, VW will be able to push ahead with forced redundancies from summer 2025, but at the same time would immediately face enormous cost increases for all those who remain," the council said as quoted by Reuters.
In response to concerns about job security, Kilian said Volkswagen is willing to start wage negotiations earlier than scheduled mid-to-late October.
