VW cuts: What do employees at Volkswagen earn?

This article first appeared at ntv.de

Volkswagen is in the biggest crisis since the 1990s, as industry expert Stefan Bratzel puts it in an interview with ntv. The location costs in Germany are 50 percent higher than in other European locations. “Something has to happen here,” says the head of the Center of Automotive Management at the University of Applied Sciences for Economics in Bergisch Gladbach. Because the previous superiority over other manufacturers and locations has been lost.

CEO Oliver Blume therefore wants to “significantly reduce” costs in Germany. The car manufacturer, known for its good salaries, wants to take an unusual step: In the current collective bargaining negotiations, the approximately 120,000 local employees are being asked to forego part of their wages – instead of getting a raise as usual. Salaries in the company collective agreement are to fall by ten percent, and the monthly allowance of almost 170 euros as well as anniversary payments for long-standing employees are to be eliminated – in addition to factory closures and thousands of jobs being cut. Several VW plants are far from being utilized to capacity. Another planned savings measure is therefore to reduce bonuses for specialists and managers.

The IG Metall union is protesting against the plans and has started with them. “If necessary, this will be one of the toughest conflicts that Volkswagen has ever seen,” warns IG Metall negotiator Thorsten Gröger. After initially demanding a seven percent increase in wages, the union presented a new proposal: to take over the wage increase of 5.1 percent from the metal industry, but not to pay out the money, but rather to use it to finance a reduction in working hours at full wages in order to avoid operational dismissals and to prevent factory closures. It didn’t take long for the company to reject the plan as inadequate.

So far, most employees in production earn 3,900 to 4,300 euros gross per month, as the works council announced in response to an inquiry from ntv.de. Bachelor graduates start at 5300 euros, Master graduates at 5600 euros. Masters receive a good 5,950 euros, or more if they have more responsibility. Experienced or highly sought-after specialists such as engineers, programmers or quality assurance specialists can earn up to a good 7,700 euros.

Salaries in the VW in-house tariff start at around 2,400 euros for semi-skilled jobs, for example in the commercial kitchen. You can earn a good 3,500 euros in factory security, for example at the gates. In all salary levels, there is an additional monthly allowance of almost 170 euros and an annual bonus, with an average of around 4,360 euros in recent years. Most recently, the annual bonus payment, which replaces vacation and Christmas bonuses, was more than 4,730 euros.

With a typical worker’s salary of around 4,100 euros, the gross annual total was around 56,000 euros. Spread over twelve months, that would be just under 4,670 euros. There are also surcharges for night and Sunday work. The regular working hours are 35 hours per week. According to the Handelsblatt, around half of VW employees still have an old contract that stipulates 33 hours per week for production employees and 34 hours for office employees. In addition to 30 days of vacation for a full-time position, employees also receive six days off.

For comparison with other employers: According to the Federal Statistical Office, the average gross salary of full-time employees across all sectors last year was just under 4,500 euros. According to calculations by the job portal Stepstone, the so-called median salary was 3,650 euros – so half earned more, half earned less. The working hours were often longer and the number of paid days off was lower.

The VW in-house tariff applies to the plants in Wolfsburg, Braunschweig, Hanover, Salzgitter, Emden and Kassel as well as VW Financial Services and Volkswagen Immobilien. The plant in Osnabrück is not included, the three Saxon locations only from 2027. Specialists and managers below non-tariff management at VW, such as a company doctor or the head of a sub-department, are paid according to their own collective agreement and earn more than 8,000 euros, in some cases over 9000 euros. There is also a separate collective agreement for temporary workers, but this has been terminated. So far, VW says it has paid far more than the competition. In the future, the conditions should be based on the rest of the industry.

The board also wants to save on itself. The board members announced in the spring that they would reduce their fixed salaries by five percent. However, this is only a fraction of the total compensation of board members, in which bonus payments play a crucial role. Blume’s fixed salary as VW boss last year was 1.3 million euros, so if his remuneration remained the same he would forego 65,000 euros – from a good 8.7 million euros without pension provisions. Human resources director Gunnar Kilian earned almost 5.6 million euros during the period.

Last year – his first full year at the top of the company – Blume immediately moved into the top group of the highest paid DAX CEOs, as the Reuters news agency reported. According to the annual report, including pension contributions, his remuneration amounted to 9.71 million euros. The employees are demanding further cuts for management in collective bargaining. Industry expert Bratzel said in an interview with ntv.de: “It wouldn’t bring in that much money, but it would be an important symbol.”