VW Wants To Eliminate Bonuses And Cut Wages By 10%

Volkswagen recently reported a dismal third quarter and now they’re looking at their workforce to help pick up the slack. This will likely go over like a lead balloon as they’re effectively telling the IG Metall union to get lost.

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According to the automaker, the union wants a 7% pay increase as well as the reinstatement of recently terminated agreements without modification. Volkswagen said they can’t do this due to the “economic crisis in the automotive industry” and went a step further by asking for a 10% pay cut. The company said the move would give them the “means to make future investments” as well as safeguard jobs.

More: VW May Close Three German Plants, Lay Off Thousands

Volkswagen’s chief negotiator for collective bargaining, Arne Meiswinkel, said “We are very concerned about the current trend in the auto industry in Europe, and especially in Germany as a business location. The deterioration in Volkswagen’s figures for the last quarter underline, particularly for the Volkswagen brand with a margin of only 2.1 percent, makes this particularly clear.”

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Meiswinkel went on to say “one of the things we need to do is reduce our labor costs.” He suggested the cuts would enable wages to be at a “competitive level relative to the industry benchmark.”

While no one wants a pay cut, the company claimed that wages would still be “very attractive” even after a 10% reduction. However, Volkswagen isn’t stopping there as they also want to slash bonuses and other incentives.

This is a bit more complex, but they want to tie some bonuses to profit-sharing. Furthermore, Volkswagen wants to eliminate anniversary bonuses as well as the “collectively agreed bonus” of €170 ($185) per month.

On top of that, Volkswagen is seeking a “future-proof, competitive standard collective bargaining agreement with uniform working conditions.” The company said this should include a 35-hour work week and the elimination of some protections for employees who joined the automaker prior to 2005. Other changes being sought by the automaker include modifications to the training process and changes for temporary workers.

While Volkswagen didn’t mention plant closures, they’re on everyone’s mind and will likely play a huge role in the next round of bargaining that will take place on November 21. Those discussions will likely be tense, but Meiswinkel said “In a difficult situation like the present, we must all pull together.”

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