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Germany's largest trade union, IG Metall, said Volkswagen plans to hold pay for its roughly 660,000 employees worldwide at current levels until 2030, suspending all salary increases. The directive reportedly took effect at the beginning of October.

IG Metall warned that the freeze would cost workers at least 10% of their purchasing power and vowed strong resistance, calling the management plan unrealistic as new collective bargaining talks are due to begin at the end of November.

Directive freezes pay at current levels

In a statement, IG Metall said the Volkswagen European and Global Works Council told workers that company management had instructed human resources managers to preserve existing collective agreement pay levels and suspend all wage increases. The union said the directive took effect at the beginning of October.

According to the union, employees could lose at least 10% of their purchasing power under the "zero raise" policy that would run until 2030.

Union signals firm resistance

IG Metall described the move as unrealistic and announced that it would resist the plan firmly. The union argued that structural problems in the automotive and metal sectors cannot be solved through pay cuts, and that personnel costs account for a small share of total sales costs.

Volkswagen Group employs more than 660,000 people worldwide, including about 275,000 in Germany, where 130,000 workers are covered directly by the company's collective agreement. IG Metall is seeking a 5% pay rise for Volkswagen employees as well as for roughly 3.7 million workers in the metal and electrical industries nationwide.

Union officials said Volkswagen management had not formally submitted its demands, and noted that the zero-raise plan points to how difficult future negotiations will be.

Talks to start as group restructures

Volkswagen Group is undergoing the largest restructuring in its history. Negotiations on new collective agreements are expected to begin at the end of November and will affect the metal and electrical engineering sector-wide deals that also cover group subsidiaries such as Audi, MAN and Porsche.

Management cancelled the existing collective agreements about a month ago and aims to cut another 50,000 jobs worldwide in the coming years on top of current reduction plans. Details of these programs are still being negotiated with worker representatives, and the future of the plants in Emden, Hannover and Zwickau as well as Audi's Neckarsulm site beyond 2031-2034 remains uncertain.

Key takeaways

• IG Metall says Volkswagen plans to freeze wages worldwide until 2030, a policy it says took effect at the beginning of October.
• Workers face a loss of at least 10% in purchasing power, according to the union, which vowed strong resistance and called the plan unrealistic.
• Volkswagen employs more than 660,000 people globally and about 275,000 in Germany, with 130,000 covered by the company's collective agreement.
• New collective bargaining talks are expected to start at the end of November, amid plans to cut 50,000 more jobs worldwide.