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Volkswagen reaches agreement with works council on savings package

The cost-cutting package has been under discussion for months. Now the company and employee representatives have agreed on key points. There will be no redundancies or wage cuts.

A Volkswagen logo is reflected in an escalator at the VW main plant in Wolfsburg. Photo.aussiedlerbote.de
A Volkswagen logo is reflected in an escalator at the VW main plant in Wolfsburg. Photo.aussiedlerbote.de

Improvement in earnings - Volkswagen reaches agreement with works council on savings package

After months of wrangling with the Works Council,Volkswagen has agreed on the key points of a multi-billion euro savings program for the core Volkswagen brands. According to the agreement, personnel costs in the administrative area are to be reduced by 20 percent, but no compulsory redundancies will be made, as the company announced in Wolfsburg on Tuesday. Significantly greater savings are to be made in material and fixed costs.

The program is expected to improve earnings by four billion euros as early as next year and by ten billion euros per year by 2026. The return on sales should then increase from 3.4 to 6.5 percent. Brand CEO Thomas Schäfer announced the "Performance Program" package in the summer. Negotiations with the works council have been ongoing since the beginning of October.

"In recent weeks, we have taken a big step forward in designing the most comprehensive program that the brand has ever set up," said Schäfer. "The agreement with the employee side is an important step towards being able to continue on the path we have taken quickly."

Head of the Works Council Daniela Cavallo said that the jointly agreed course would strengthen competitiveness in the long term without being unilaterally detrimental to employees. "We have not allowed any wage cuts or cuts to our job security." The previously agreed job security will remain in place until 2029.

According to Cavallo, the majority of the savings will now be made outside of the personnel area. In addition to material and fixed costs, this also involves sales and product development. The development time for new models is to be reduced to 36 months. Cavallo: "The billion-euro improvements we are now targeting are an impressive demonstration of the decisive levers that the core brand can use to unlock further efficiency in our strong Group network."

VW left open how many jobs are to be cut. It is not about heads, but about costs, said a spokesperson when asked. In order to achieve the goal without redundancies, partial retirement is to be extended. "We will also offer selective termination agreements at all levels if necessary," added Chief Human Resources Officer Gunnar Kilian. The recruitment freeze in place since the beginning of November will also remain in place.

Read also:

  1. Daniela Cavallo, the head of the Works Council at Volkswagen, announced that the majority of the savings under the agreed-upon savings package will be made outside the personnel area.
  2. The 'Performance Program' savings package, which includes reducing personnel costs in the administrative area by 20%, was announced by Thomas Schäfer, the CEO of the Volkswagen brand.
  3. The Volkswagen Works Council and the company reached an agreement on the key points of a multi-billion euro savings package in Lower Saxony, Germany, which is expected to improve earnings by four billion euros as early as next year.
  4. Gunnar Kilian, the Chief Human Resources Officer at Volkswagen, mentioned that in order to achieve cost savings without redundancies, partial retirement will be extended and selective termination agreements may be offered at all levels.
  5. The "Performance Program" savings package, which was initiated by brand CEO Thomas Schäfer in the summer, is set to make significantly greater savings in material and fixed costs, as well as sales and product development.
  6. The Volkswagen works council, led by Daniela Cavallo, stated that the agreement will strengthen competitiveness without being unilaterally detrimental to employees and will not result in any wage cuts or job security cuts.

Source: www.stern.de

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