Last Updated on 10/09/2024 by Arun jain
Volkswagen told union leaders on Tuesday it was ending a labor contract that protects workers from layoffs, a week after the automaker said it was considering closing factories in Germany amid declining sales and rising costs.
The company warned Last week it needed to restructure its namesake brand to stay competitive in the face of declining demand in Europe and overseas and increased competition from China. The move could include closing one or two assembly plants in Germany, which would be a first for the 87-year-old auto maker.
Volkswagen said in a statement that the decision to drop the contract, which offered job security along with several other labor deals, was necessary to ensure the future of the company.
“We must invest from our own resources in new technologies and new products to reduce costs in Germany to put Volkswagen in a position to be competitive,” Volkswagen’s head of human resources and labor, Gunnar Kilian, said in the statement. .
A job security clause in the labor agreement between Volkswagen and the union, IG Metal, which covers workers in automotive and other heavy industries, has been in place since 1994 and protects workers from layoffs until 2029. Volkswagen said it would remain in effect until the end of the year and that the layoffs could take place by the end of June 2025 at the earliest.
Daniela Cavallo, head of the works council at Volkswagen and a member of IG Metall, pledged that the union would fight to defend the labor agreement. “We will fiercely resist this historic attack on our jobs,” Ms. Cavallo said in a statement. “With us, there will be no layoffs.”
Volkswagen said it was also ending other labor agreements, obliging it to offer permanent positions to all vocational trainees and apprentices at the company, as well as offering wages to temporary workers above the standard rate for the automotive industry.
About half of Volkswagen’s 650,000 workers worldwide are in Germany. The company and union are expected to begin negotiations on a new wage deal this fall. The union is seeking a 7 percent pay increase, with additional demands including avoiding plant closures.
Volkswagen Group owns 10 brands including Porsche and Audi. Last week, the company informed union leaders at a plant in Brussels that it has no plans to continue production of its Q8 model beyond 2025. If no new models are found, the plant will close and 3,000 jobs will be lost.
Post Volkswagen abandons labor contract, paves way for job cuts appeared first New York Times.