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Market Analysis

VW and unions begin crucial salary negotiations in the wake of potential factory closures
Amos Simanungkalit · 4.7K Views

12

Powerful trade unions and executives at Volkswagen (ETR) are set to begin pay negotiations on Wednesday, which could significantly influence the extent to which Europe’s largest automaker proceeds with layoffs and potential factory closures in Germany.

Tensions are high at the company as the possibility of plant shutdowns, revealed earlier this month, has put Volkswagen on a collision course with the IG Metall union. The union has promised staunch resistance against any such moves.

In addition, IG Metall must negotiate new labour agreements for the core VW brand’s 130,000 workers in Germany. This follows Volkswagen's decision earlier this month to end agreements that had secured jobs at six of its western German plants since the mid-1990s.

Volkswagen contends that Germany’s high energy and labour costs place it at a competitive disadvantage compared to European peers and Chinese competitors, who are eager to capture a significant share of the European electric vehicle market.

These talks come at a time when Germany’s industrial sector is grappling with rising costs, labour shortages, and increased competition. Major companies like BASF and Thyssenkrupp (ETR) are also considering scaling back operations.

Other German automakers are facing challenges as well. Both Mercedes-Benz (OTC) and BMW (ETR) have recently lowered their profit forecasts due to sluggish demand in China.

 

 

 

 

 

Paraphrasing text from "Reuters" all rights reserved by the original author.

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