Volkswagen enters third round of wage talks as strike action looms

WOLFSBURG (Reuters) – Volkswagen (ETR:) management and worker representatives begin a third round of wage negotiations on Thursday, with just ten days left to find a solution before unions have threatened to escalate the fight with strikes across German sites.

The negotiations are over wages for 120,000 of Volkswagen’s roughly 300,000 staff in Germany, employed at six plants governed by a separate collective wage agreement to the rest of the workforce.

Volkswagen has demanded a 10% wage cut, arguing it urgently needs to cut costs and boost profits to stay competitive and defend market share in the face of rivalry from Chinese companies and a drop in car demand across Europe.

Unions on Wednesday proposed forgoing bonuses for two years and creating a fund to finance a temporary reduction in working hours in less productive areas of the business. They said these measures would avoid redundancies and generate 1.5 billion euros ($1.58 billion) in cost savings.

The fund would be financed by a 5.5% wage increase for the workforce, which workers would place into the fund as an act of solidarity towards colleagues in areas of the business suffering from overcapacity whose jobs would be at risk. Unions did not provide details on how these savings would be generated.

But the proposal was contingent on management ruling out plant closures, which VW has refused to do.

If management rejects their proposal, unions – a powerful force at Volkswagen controlling half the seats on its supervisory board – will demand a 7% pay rise and no plant closures.

If their demands are not met, workers will strike from Dec. 1 across German sites, the first large-scale strikes at VW AG since 2018 when over 50,000 workers took to the streets over pay.

“We welcome that worker representatives are signalling openness to measures on labour costs and overcapacity… We will go into a detailed exchange in the negotiations to make a financial assessment of the suggestions,” VW board member Gunnar Kilian said in a statement.

($1 = 0.9494 euros)