Is The Number Of Job Cuts At Volkswagen AG Too High?

Is The Number Of Job Cuts At Volkswagen AG Too High?

VW's labour leaders said management had agreed to avoid forced redundancies in Germany until 2025, a step which clears the way to cutting 23,000 jobs via the more palatable methods of buyouts, early retirements and reducing part-time staff.

At the meantime, 9,000 new jobs in future-oriented areas where 3.5 billion euros (about US$3.71 billion) would be invested, are planned to be created in Volkswagen's plants in Germany, said the company. Herbert Diess, the Volkswagen executive in charge of VW brand cars, said the company needed to brace itself for drastic changes as the automobile industry shifted to electric vehicles.

Volkswagen has been making cars in Wolfsburg for nearly 80 years and employs 114,000 staff in Germany.

It has announced it will be trimming about 30,000 jobs in effort to cut costs. Last year, the business admitted to rigging about 11 million diesel cars so that they pass emissions tests.

The emissions crisis hit VW sales - 10% down in the United Kingdom alone in the 12 months after it emerged - with the company reporting its first financial loss in over two decades past year. Meanwhile, the VW brand, which was already struggling before the diesel crisis began, saw its operating profit margin decline to 1.6 percent in the first nine months. The German company has also been slow to cease production of unprofitable vehicles in its 340-model range. Management, with crucial support from powerful labor representatives, aims to boost productivity by 25%, increase annual earnings by €3.7 billion ($3.9 billion), and double pretax profit margins to 4% by 2020.

Volkswagen employs 610,000 people in 31 countries. This software could identify the testing and reduction of harmful toxics to showcase that the cars met the requirements, but in reality, they didn't. "Many didn't think we could do it", Diess said.

Last month it agreed a $14.7 billion settlement with authorities in the United States that includes compensation for almost half a million owners of the affected cars. 23,000 of these jobs are located in Germany, while the remaining 7,000 will be at different locations around the world.

The works council's chairman, Bernd Osterloh, said it had "ensured that these future vehicles are built in Germany and not overseas".