According to Volkswagen's Global Works Council, the automaker is proposing a global salary freeze covering approximately 660,000 employees until 2030 as part of a broader corporate restructuring, a report disclosed by Süddeutsche Zeitung, meets staunch opposition from labor leaders.
The proposed salary freeze forms part of a broader effort by the German company to reduce expenses amid mounting competitive pressures, weakening demand in key markets and the high costs associated with its transition to electric vehicles (EVs).
Volkswagen's Global Works Council has criticised the proposed salary freeze, describing it as unrealistic and warning that it would face significant resistance from employees and their representatives.
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The proposal could extend beyond regular salary increases, with reported measures potentially including cuts to variable pay, special payments and employee benefits, alongside further job reductions. However, the precise scope and implementation of these measures have not been confirmed.
The works council has expressed concern about the impact of the proposed changes on employees, particularly if wages remain unchanged while living costs continue to rise.
According to Süddeutsche Zeitung, the absence of salary increases could lead to an estimated 10% decline in employees' purchasing power by the end of the decade, depending on inflation over the period.
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Cost Pressures
The proposed measures come as Volkswagen seeks to improve its financial position and streamline operations amid significant changes in the global automotive industry.
The company faces increasing competition, particularly in the electric vehicle market, alongside weaker demand in some major markets. The transition from conventional vehicles to electric mobility also requires substantial investment in technology, production facilities and product development.
Chief Executive Oliver Blume has been pursuing a broader restructuring strategy as Volkswagen works to address these challenges. The proposed salary freeze is part of the wider debate over how the automaker can reduce expenses while managing its transition to electric mobility.
Company Response and Next Steps
Volkswagen declined to comment on the salary-freeze proposal, describing it as speculation. The company indicated that an upcoming round of discussions would provide an opportunity to address labour costs.
Employee representatives and the IG Metall trade union have maintained that wage-related decisions must be negotiated with workers' representatives rather than imposed unilaterally.
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The outcome of the discussions remains uncertain. Any agreement on salary adjustments, benefits or further cost reductions will depend on negotiations between Volkswagen management and employee representatives as the company continues its restructuring efforts.
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