Volkswagen is cutting staff to reduce personnel and labor costs. VW rolled out a new global performance program to improve vehicle releases and reduce costs.
Management and employee representatives at Volkswagen recently discussed the company’s future and reached an agreement to improve performance. Both parties have agreed to reduce staff starting January 2024.
Volkswagen plans to decrease administrative staff costs by 20%. The legacy OEM will extend its partial retirement scheme to employees born in 1967 and severely handicapped employees born in 1968.
VW will offer selective termination agreements at all levels if necessary. The company states that it will not implement a general termination agreement program. Volkswagen has no intention of filling open positions with workers outside the Group. It plans to fill open positions through Volkswagen’s internal job market.
The German automaker will maintain its hiring freeze and access freeze to the Tarif Plus salary group until further notice.
“With the agreement on the key measures, we are taking a decisive step to move Volkswagen back to a leadership position. This requires not only structural but also personnel reduction measures. As a leading employer, it goes without saying that our actions will be socially responsible.
“In addition to the company’s hiring freeze and stabilization of higher pay grades in the Tarif Plus bracket, which will continue, we agreed with the employee representatives to extend our partial retirement option to all employees born in 1967, thereby reducing the workforce as much as possible along the demographic curve, especially in the administrative units of Volkswagen AG. We will also selectively offer termination agreements at all levels, if necessary. The agreement reached will give us flexibility from 2024 to safeguard profitability and long-term job security,” said Gunnar Kilian, VW Group’s Chief Human Resources Officer.
Volkswagen’s staff cuts are part of the “Accelerate Forward/Road to 6.5” program, designed to improve the company in all areas and [at] all levels.
The program includes measures to improve new vehicle releases. Volkswagen aims to release new vehicles to the market faster, cutting the time from 50 to 36 months. The new program is also designed to make vehicle production more cost-efficient and help the company make a positive earnings contribution of up to €10 billion by 2026.
Volkswagen expects to offset negative effects from inflation and higher raw material costs through its “Accelerate Forward/Road to 6.5 program. VW estimates positive earnings contributions of €4 billion as soon as 2024.