Volkswagen has canceled an agreement that had been in place since the 1990s to protect jobs in Germany.
The largest automaker in Europe said that it has officially informed unions of the termination of the agreement, which guarantees jobs in German plants up to 2029. The jobs would be protected up until the end June 2025.
The company’s brands include Skoda Audi Seat Porsche said that it had to terminate the agreement in order to remain competitive, as the market is reorienting towards electric vehicles.
The company is believed to be struggling in the new electric car market to compete with BYD Autos, owned by the Chinese and Tesla, owned by the US.
VW’s head of human resources Gunnar Killian said that the moves were intended to “reduce German costs to a level where they are competitive, so we can invest our own resources in new technologies and products.”
The company called for employee representatives to be involved in discussions to ensure the “long-term” competitiveness of Volkswagen. Volkswagen’s brands include Porsche, Audi, Skoda, and Seat.
Daniela Cavallo is the chairwoman of VW’s powerful works council, and a member IG Metall. She has vowed “to put up a fierce resistance to this historical attack on our jobs”. There will be no job cuts with us.
In Germany, the auto giant has 300,000.
VW announced earlier that it would cancel a number of agreements with employee representative and that some German manufacturing sites may be closed. According to reports, the firm believes that one large vehicle factory and one component plant in Germany are obsolete
Last week, thousands of workers protested outside the Wolfsburg headquarters as the executives tried to justify their plans.
VW’s structure makes it more difficult to make cuts than other companies. The company’s supervisory boards are made up of half workers’ representatives and Lower Saxony, which holds a 20% stake in the company.
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