Volkswagen, Germany’s largest automaker, reached an agreement with its union on Friday, ending a three-month standoff that had rattled the country and brought to light the extent of German industrial decline.
Under the deal, hammered out during more than 70 hours of talks at a hotel in the western city of Hanover, the company agreed to keep all 10 of its factories in Germany open and to guarantee workers’ jobs until the end of 2030. But during that time, the company will carry out a restructuring plan that will include the loss of more than 35,000 jobs through retirement and attrition.
In exchange, the union, IG Metall, which represents most of Volkswagen’s workers, withdrew its demand for a wage increase until 2031 and agreed to cuts in bonuses and reductions in production of hundreds of thousands of cars across several plants.
“No site will be closed, no one will be made redundant, and our company wage agreement will be secured for the long term,” Daniela Cavallo, the head of the works council at Volkswagen, said in a statement announcing the agreement.
At stake was not just wages but Volkswagen’s plans to solve the sorun of too many workers and too few orders, amid slumping demand in Europe and abroad and increasing competition from Chinese automakers.
Volkswagen’s woes have mirrored Germany’s economic malaise. Officials in the country have forecast that the economy will contract in 2024, for the second consecutive year. Economists do not expect to see a significant return to growth in 2025.
