Volkswagen on Tuesday terminated an agreement that had protected jobs in Germany for 30 years, as the ailing auto giant continues with a controversial cost-cutting plan.
Europe’s largest carmaker said it had officially notified unions of the end of the deal, which had guaranteed jobs at German factories until 2029.
Even after the agreement ends, jobs will remain protected until the end of June next year.
“We must enable Volkswagen to reduce costs in Germany to a competitive level so that we can invest in new technologies and new products from our own resources,” VW said in an internal memo.
It called for talks with employee representatives to ensure the “long-term competitiveness” of Volkswagen, whose brands range from Porsche and Audi to Skoda and Seat.
Volkswagen made the shocking announcement last week that it is considering closing factories in Germany, where around 300,000 people work, for the first time in the company’s 87-year history.
The group is struggling with high production costs in Germany, a difficult transition to electric vehicles and fierce competition from local rivals in the important China market.
VW had previously indicated that a series of agreements with employee representatives would be scrapped. But Tuesday’s move nevertheless sets the stage for a fierce confrontation with employees.
Daniela Cavallo, chair of VW’s powerful works council, vowed to “fiercely resist this historic attack on our jobs. There will be no layoffs here.”
After VW announced last week that it might close factories in Germany, thousands of people protested outside the group’s historic headquarters in Wolfsburg as executives tried to justify the plans.
The problems at Volkswagen are also a major blow to the government of Chancellor Olaf Scholz, at a time when the domestic economy was already struggling.
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