VW wants to reduce personnel costs in administration by 20 percent. This should be achieved without any layoffs. Partial retirement is being expanded and younger people are being offered severance pay.
Europe’s largest car manufacturer VW is offering targeted severance payments and expanding partial retirement as part of its savings program. The company announced in an internal communication to the workforce that the offer of partial retirement would be extended, which was available to the German Press Agency. In addition to those born in 1967, for whom the program was last opened, the deadline for reporting will be extended for those born in 1965 and 1966, for whom corresponding programs already existed, and younger employees will be specifically offered severance pay. A spokeswoman confirmed the information when asked by the dpa.
“We are approaching the restructuring of Volkswagen AG in a very conscious and targeted manner,” said Human Resources Director Gunnar Kilian, according to the statement. “We agreed on this with the works council.” The goal is to reduce personnel costs in administration by 20 percent by 2026.
The savings are part of the efficiency improvement program launched last year. The group had already agreed on key points with the works council in December. Redundancies for operational reasons were excluded. VW left it open how many jobs would ultimately be cut. It’s not about heads, it’s about costs, they said.
Great interest in partial retirement
“We are currently seeing great interest in our attractively designed partial retirement,” said Human Resources Director Gunnar Kilian, according to the announcement. “With an average of 85 percent of their salary in the active and passive phase, we offer our colleagues the transition to a financially secure retirement. At the same time, partial retirement offers the company the opportunity to sustainably reduce staff in a socially acceptable way.”
In addition, the group’s board of directors decided to specifically offer termination agreements in exchange for severance pay in the administrative area. There is an additional special bonus for those who make quick decisions until the end of May. Unlike previous severance pay programs, the offer does not apply to everyone interested, but must be accepted by VW in each individual case. In addition, it only applies to employees in administration and not in production.
No blanket severance program
“We consciously decided against a blanket offer to terminate the contract,” explained Kilian. “It is clear that a sustainable reduction in personnel costs can only be effective if we use our personnel instruments in a targeted manner and in the spirit of double voluntary action.”
The program is expected to bring four billion euros in earnings improvement for the Volkswagen core brand as early as next year, and by 2026 this should rise to ten billion euros per year. According to previous information, only a fraction of this is due to personnel costs. There should be significantly greater savings in material and fixed costs.
Source: Stern
