The austerity package has been fought over for months. Companies and employee representatives have now agreed on key points. There should be no layoffs or wage cuts.
After months of struggle with the works council, Volkswagen has agreed on the key points of a billion-dollar savings program for the core Volkswagen brand. Personnel costs in the administrative area should therefore fall by 20 percent, but there will be no redundancies for operational reasons, as the company announced on Tuesday in Wolfsburg. There should be significantly greater savings in material and fixed costs.
The program is expected to bring four billion euros in earnings improvement as early as next year, and by 2026 this should rise to ten billion euros per year. The return on sales should then increase from 3.4 to 6.5 percent. Brand boss Thomas Schäfer announced the package, called the “Performance Program,” in the summer. The design has been negotiated with the works council since the beginning of October.
“In the past few weeks, we have taken a big step forward in designing the most comprehensive program the brand has ever set up,” said Schäfer. “The agreement with the employee side is an important step in order to be able to quickly continue on the path we have chosen.”
Job security until 2029
Works council head Daniela Cavallo said that the jointly defined course would strengthen competitiveness in the long term without being one-sidedly at the expense of the employees. “We did not allow collective bargaining cuts or compromises in our job security.” The previously agreed job security will remain until 2029.
According to Cavallo, the majority of the savings will now take place outside of the personnel area. In addition to material and fixed costs, it also involves sales and product development. The development time for new models should be shortened to 36 months. Cavallo: “The billion-dollar improvements that are now being targeted show impressively the crucial levers that the core brand can use to unlock further efficiency in our strong group of companies.”
Stephan Weil: “I’m happy.”
Lower Saxony’s Prime Minister Stephan Weil welcomed the agreement. “I am glad that the board 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 socially acceptable reduction in personnel, the other measures decided to increase performance and save costs must also be successfully implemented.” With 20 percent of the voting rights, the state of Lower Saxony is VW’s second largest shareholder after the Porsche and Piëch families, which hold 53 percent.
VW left it open how many jobs would be eliminated. It’s not about heads, but about costs, said a spokesman when asked. In order to achieve the goal without layoffs, partial retirement should be expanded. “In addition, if necessary, we will offer selective termination agreements at all levels,” added Human Resources Director Gunnar Kilian. The hiring freeze that has been in place since the beginning of November will also remain in place.
Source: Stern
