Volkswagen to freeze pay for 660,000 employees until 2030

Volkswagen's management plans to freeze the pay of more than 660,000 employees worldwide at this year's level and keep it there until 2030. This was stated by Germany's largest trade union, IG Metall. According to the union, the group has already issued an instruction not to raise pay, effective since the beginning of October.

What the unions say

The group's European and global works council informed employees of management's intentions on the intranet. The measure does not provide for pay rises even at the rate of inflation. “Because of inflation, which usually raises the cost of living year after year, this would lead to a decline in real wages,” union representatives said. They expect serious resistance from workers: in effect, it would mean wage cuts of ten percent or more over the next four years.

A Volkswagen spokesperson told the DPA agency: “We do not comment on such speculation.”

Restructuring and Škoda

The group has recently been struggling with high costs, overcapacity, growing Chinese competition and US tariffs, and is preparing a large-scale restructuring. The closure of four plants in Germany cannot be ruled out. Last month the supervisory board approved the largest restructuring plan in the company's history: cutting up to 100,000 jobs worldwide by the end of the decade and limiting the number of models.

Unlike its parent group, Škoda Auto is doing well. Global sales in the first three quarters rose by 6.1% to 812,400 cars, while sales of the whole group fell by nine percent to roughly six million vehicles. Škoda Auto has repeatedly said that the group's new transformation plan has no direct impact on its operations.

As recently as the end of September, Volkswagen announced that it would revisit the future pay agreement with IG Metall and terminate a number of existing collective agreements by 31 December this year, in order to gain more freedom to cut staff. The unions called the move a major disappointment and threatened to escalate the dispute, up to and including strikes. These could begin on 1 January, when the current truce expires.

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Around Prague, based on reporting by novinky.cz