20,000 Volkswagen Workers in Germany Opt for Early Retirement

Around the end of last year, Volkswagen Group faced a significant downturn in its financial results, prompting the company, Europe's largest vehicle manufacturer and a key industrial player in Germany, to consider a cost restructuring plan.

This plan included the potential closure of up to three factories in Germany—historically protected by labour agreements—and a workforce reduction of up to 35,000 employees in its home country, where labour costs are higher.

Yesterday, at least 20,000 company workers signed an early retirement agreement, with two-thirds opting for partial retirement. According to the German newspaper Bild, "workers will receive severance pay based on their seniority, which could reach up to 400,000 euros. Human Resources Director Gunnar Kilian did not disclose the total amount."

Starting in 2026, the German consortium will reduce the number of apprentices and trainees it offers annually from 1,400 to 600. This is one of the steps to save 1.5 billion euros in labour costs per year.

Another measure is the wage freeze agreement for the 130,000 employees of the Volkswagen brand, which accounts for the largest sales volume of the group. Instead, a 5% wage increase will be paid in two stages into a fund that will finance flexible working hours. Additionally, the holiday bonus, previously around 1,300 euros, will be eliminated.

According to the major union, IG Metall, "these measures prevented the closure of VW plants. However, given the persistent weakness of German manufacturers, it is doubtful that this promise will hold for long."

The year 2024 marked a period of labour tensions in the group's native Germany, where an agreement was reached to cut 35,000 jobs in the country over the next five years, with effects solidifying in 2027 but beginning to be felt this year.

Nevertheless, the group managed to surpass the 9 million units delivered worldwide—a 2.3% decline—securing its position as the second-largest globally, behind Toyota, which exceeded 11 million vehicles.

By divisions, the Core group, which includes its volume brands (Volkswagen, Skoda, Seat, Cupra, and commercial vehicles), recorded an operating result of 6.961 billion euros, a 3.9% decrease from the previous year. This was the bulk of the company's result, accounting for about a third of the total. Its operating margin was 5%, compared to 5.3% the previous year.