Angry VW union to ratchet up dispute after labour deals cut short

By Rachel More

HANOVER, Germany, Sept 30 (Reuters) – Volkswagen terminated several wage deals with IG Metall on Wednesday, raising the possibility of strikes at the start of next year as Germany’s top industrial union vowed to escalate its dispute with the world’s second-largest automaker.

Relations between Volkswagen and its powerful labour representatives have already deteriorated in recent months, as CEO Oliver Blume pushes ahead with the most radical restructuring in the German auto group’s history.

With Chinese carmakers sharpening their focus on Europe, pressure on German auto manufacturing is only growing. Both Volkswagen and Mercedes-Benz have threatened plant closures if costs aren’t brought into line with competition.

UNION TELLS VW TO ‘EXPECT A FIGHT’

Volkswagen’s exit from the bulk of its collective bargaining framework from December 1 opens the possibility of renegotiating costly labour benefits for its German workers – at the risk of walkouts.

IG Metall representative Thorsten Groeger, brandishing a letter he said included the termination of various agreements, vowed a furious response, with the union’s strike truce set to expire on January 1.

“This is a despicable blow to the workforce,” Groeger said. “We will not accept this. Anyone who tries to reach into the employees’ pockets must expect a fight.”

The human resources chief of VW’s core brand, Arne Meiswinkel, said management was acting to ensure the company remains fit for the future.

“We must continue to work on our cost structures,” he said. Terminating the agreements “gives us room to negotiate so that we can then agree on the necessary measures”, he added.

WAGE AGREEMENT FOR 100,000 WORKERS TERMINATED

The terminated contracts include VW’s umbrella wage agreement for some 100,000 workers at its main German plants, which governs working hours, holiday pay and other standards – many seen by IG Metall as hard-won rights for workers.

Volkswagen last cancelled parts of its collective bargaining framework with the union in September 2024, triggering a wave of strikes that culminated in a landmark labour deal including 35,000 job cuts.

In return, the labour side clinched a job security guarantee until the end of 2030 and investment promises for German plants, some of which are now on the chopping block in Blume’s restructuring drive.

IG Metall has urged Volkswagen to adhere to its commitments. The 2024 agreement is not among the terminated contracts.

Volkswagen said the two sides had agreed to meet again in the second half of October.

Cuts alone will not prepare Volkswagen for the challenges ahead, veteran automotive analyst Ferdinand Dudenhoeffer said. “Management seems to have forgotten that a war on the workforce does not forge a path for the future.” 

Volkswagen has also pledged to simplify the sprawling group’s investment portfolio and model lineup, while racing to catch up in the increasingly key field of software.

(Writing by Rachel More and Kirsti Knolle; Editing by Kirsten Donovan and Alexander Smith)