Volkswagen reaches agreement with works council on savings package

Work - 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 brand. 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."

Job security until 2029

Works Council Chairwoman Daniela Cavallo said that the jointly agreed course would strengthen the company's 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 key levers that the core brand can use to unlock further efficiency in our strong Group network."

Stephan Weil: "I am delighted."

Lower Saxony's Minister President Stephan Weil welcomed the agreement. "I am pleased that the Board of Management and employee representatives have now agreed on a key points paper," said the SPD politician, who is also a member of the VW Supervisory Board. "In addition to the agreed socially responsible staff cuts, the other agreed measures to improve performance and cut costs must also be successfully implemented." With 20 percent of the voting rights, the state of Lower Saxony is the second largest VW shareholder after the Porsche and Piëch families, who hold 53 percent.

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 layoffs, partial retirement is to be extended. "If necessary, we will also offer selective termination agreements at all levels," added Chief Human Resources Officer Gunnar Kilian. The recruitment freeze in place since the beginning of November will also remain in place.

Read also:

• Why there is still no EU funding for green Saar steel
• 3 billion Saar Fund is unconstitutional
• Abrupt end to e-car subsidies
• The chemical industry has little confidence

1. The agreement with the Works Council in Lower Saxony's Volkswagen plant will result in a 20% reduction in personnel costs in the administrative area.
2. Daniela Cavallo, the Works Council Chairwoman, praised the agreement as ensuring no wage cuts or jeopardy to job security.
3. Stephan Because, the Lower Saxony Minister President, welcomed the agreement and called for successful implementation of all agreed measures.
4. Volkswagen's Brand CEO Thomas Schäfer announced a "Performance Program" package targeting billion-euro improvements, with significant savings in material and fixed costs.
5. With the majority of savings now to be made outside the personnel area, Volkswagen plans to cut development time for new models to 36 months.
6. Volkswagen spokesperson declined to reveal the number of jobs to be cut, stating they're focused on cost reduction rather than layoffs, with partial retirement and selective termination agreements considered.

Source: www.stern.de