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Volkswagen is said to be putting in place the same pay plan for hundreds of thousands of employees that it had in place last year, and it couldn’t be worse at this moment. The Volkswagen pay freeze until 2030 comes at a time when the carmaker is doubling the number of jobs to be cut from approximately 50,000 to 100,000. In Germany, this means a double squeeze for factory staff – no raises and no colleagues, and their energy costs, rent and groceries keep rising.
Quick Facts
- Pay freeze: Group-wide wage increases suspended through 2030
- Job cuts: The number of jobs will be raised from about 50,000 to 100,000.
- Plan name: In the restructure, the board has approved a plan called “Group Target Picture”.
- Expectation: each region/plant is expected to contribute “what is appropriate”
- Volkswagen: 4,500 jobs set to be cut
Why Is the Volkswagen Pay Freeze Until 2030 Happening?
Labour is the quickest lever to pull, says management. Cheap imports of electric and hybrid vehicles from outside Europe are taking market share, and Volkswagen still needs to invest in its own electric transition. The firm does not want to reduce staff, but to keep everyone it retains paid at a certain level. According to internal papers, one of the main points of the Volkswagen cost-cutting plan is personnel costs.
How Much Could Workers Actually Lose?
The word ‘freeze’ implies nothing until it gets to the inflation factor. After four years of price increases of just 2% per year, real purchasing power would be about 8% lower. What’s more, the usual annual wage hikes that would boost take-home pay would also be suspended, and Volkswagen workers’ pay would actually freeze until the end of the decade.
| Scenario | Annual inflation | Approx. loss in buying power by 2030 |
| Low | 2% | About 8% |
| Moderate | 3% | About 12% |
| High | 4% | About 16% |
What Does It Mean for Job Security?
A doubling of the layoff target indicates that the restructuring is in a tougher stage. Now, employees in plants around Germany are having to deal with two fears: that their jobs may be eliminated, and that they will never get back on the same pay scale. Even those who remain could end up having to do more work due to fewer staff members.
Will the Unions Accept It?
No doubt with a struggle. Pay and plant guarantees have long been championed by the representatives of the employees, and a move to a pay freeze at the same time as major job cuts leaves little room for compromise. The Volkswagen negotiations among unions will focus instead on compromises, including job security, reduced working hours or lump-sum bonuses rather than annual salary increases.
What Are Workers’ Next Steps?
- Whether the freeze is declared in official negotiations or lightened
- The average rate of inflation in Germany, which determines the degree of pain of the freeze, will be taken into account.
Final Take
Volkswagen’s pay freeze could become one of the longest wage freezes in the company’s modern history. How workers respond to it will depend on what Volkswagen has to offer, particularly in terms of job security.
FAQs
Will Volkswagen employees get salary increases before 2030?
There are no plans for general raises, but talks may change that.
Will the Volkswagen pay raises be cancelled for 2030?
Not yet. It is a component of a management plan which needs to go through negotiations with employee representatives.
Will the Volkswagen pay raises be cancelled for 2030?
Not yet. It is a component of a management plan which needs to go through negotiations with employee representatives.
What is the impact of inflation on the pay of the workers of Volkswagen?
The cost of living continues to increase while the wage level remains unchanged, which means the same income is less valuable every year.
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