The German group Volkswagen plans to cut between 4,000 and 5,000 jobs in the next 24 months, reported several news agencies on Sunday. There will be no layoffs (which will be banned until 2029) so the solution is to negotiate exits, reopen partial and early retirement programs and freeze hiring of workers in 2021.
Weight loss will begin in Germany under the Volkswagen brand according to the agreement between management and employee representatives. Part of the plan is summed up in a statement that has also been posted on the group’s website but never mentions the total number of outputs that are to be achieved.
Partial reforms are offered to workers aged 57 (born 1964). People aged 59 or 60 (born in 1961 or 1962) also have access to the partial pension reform program, and people between the ages of 61 and 65 (born between 1956 and 1960) can apply for early retirement.
In this age group between 57 and 65, there are around 11,500 workers in the group, the statement said. “Experience shows that the company expects up to 900 employees to take early retirement. a low four-digit number for partial retirement, ”the statement said.
According to the Reuters agency, which cites unidentified sources from the German manufacturer, the company expects up to 4,000 jobs to be cut. There will be 5,000, according to Bloomberg, who cited the German business paper Handelsblatt, which revealed the plan firsthand.
The statement did not describe this figure in detail, merely announcing that management and employee representatives “have agreed a number of guidelines that set out additional components for the Group’s transformation in the current financial year”.
According to Reuters sources, 3,000 to 4,000 jobs will be cut in the six VW plants in Germany, which employ around 120,000 people, as part of this program.
The cost of this exit program depends on the number of members. An unidentified source quoted on Sunday’s news estimates it could run as high as € 500 million.
The official statement also announced that the hiring freeze, which will not last until the first quarter, will be extended later this year. Existing positions must be filled with silver from the house. And there can only be new entries for positions that are consistent with the bet on the production of software, electric cars and batteries.
The person in charge of the HR department in the management team says that it is necessary to continue “disciplined cost management” in order to “finance the investments required in the future, remain competitive and, above all, protect jobs in the long term”.
“This package contains the right measures for these goals. We are strengthening the internal transformation of our workforce and creating jobs in areas of the future. To this end, we will strengthen the training budget with 40 million euros, ”says Gunnar Kilian. This budget increases to 200 million euros.
Bernd Osterloh, President of the Labor Council (committees in the group in which the management team and the employees sit), says for his part that you are relying on a recipe that “has already proven that it works”.
The partial reform at VW has been in force since 2017. The insured employees do not leave the company immediately, but can extend them for six years. If 3000 employees adhere to this measure, the Handelsblatt will incur costs with pensions and wage subsidies, which can amount to 300 million euros, according to the Handelsblatt.
In early retirement, for example, 61-year-olds can take vacation, two years part-time contract, receive 75% of their salary and retire two years earlier. It is up to the group to partially offset the payment of the pensions.
According to estimates by VW, around 1,000 voluntary exits are still entered in the reports on the downsizing.
As part of an initiative called Power Day, the group will show today, with global broadcasting over the Internet, how and how much will depend on their future on batteries and electromobility.
In January, the group announced that sales for 2020 were down around 15% year over year. The entire group (which owns several brands) sold more than nine million cars, with the largest share being the VW brand.
The company has a new development model in mind, as defined in the Accelerate program that was presented less than two weeks ago. It’s supposed to be more like Tesla and approach the nature of a tech company. To do this, a huge transformation program must be financed, to which this and other fixed cost reduction programs will contribute, which in German factories is superior to that of the rest of the group.
In January, a two-year plan was announced to reduce general costs by 5% and deliveries by 7%.