Heaptalk, Jakarta — Volkswagen (VW) proposed a 10% salary cut for its employees as an option to save jobs from potential factory closures, as reported by Reuters (10/30). The automotive manufacturer is experiencing its lowest profits in three years, with a 42% drop, and has outlined plans to close at least three of its factories.
This move would inevitably lead to layoffs affecting tens of thousands of employees. The announcement has sparked protests from labor unions, who have threatened to strike starting in December if negotiations with company management do not yield the desired results.
The salary cuts are a cost-cutting measure officially confirmed by the company. High costs and weak demand in China have dragged down sales, leaving the factories with excess capacity.
Volkswagen needs to reduce substantial costs
Arno Antlitz, CFO & COO of Volkswagen Group, revealed that the January to September 2024 Interim Report reflects a challenging market environment and highlights the need to implement performance programs across the Group successfully. Volkswagen Brand reported an operating margin of only 2% after nine months, underscoring the urgent need for substantial cost reductions and efficiency improvements.
“Our product momentum gives us confidence. A significantly improved order intake in Western Europe in Q3 year-on-year is testament to our strengthened product line-up, from combustion engine cars to hybrids and fully electric vehicles, which provides a tailwind for the final quarter,” stated Arno Antlitz on the company’s official page (10/30).
During the second round of talks between the company and unions (10/30), VW Brand’s personnel chief, Arne Meiswinkel, said, “We urgently need a reduction in labor costs to maintain our competitiveness. This requires a contribution from the workforce,” as quoted by Reuters. Both parties have agreed to continue negotiations on November 21, 2024.
