Volkswagen and IG Metall persist in their efforts to negotiate a compromise.
Volkswagen and IG Metall persist in their efforts to negotiate a compromise.
The tug-of-war in Volkswagen's wage dispute has gotten more intense. Even though both parties wish to meet once more to hammer out a settlement before the holidays, the significant difference in positions makes a compromise highly unlikely.
Volkswagen and IG Metall are planning a two-day negotiation face-off the upcoming week to put an end to the wage dispute prior to Christmas. Both parties are set to meet on Monday, possibly continuing into Tuesday. As of now, neither side is acknowledging any substantial advancements.
This round of talks won't take place in Wolfsburg but in a Hannover hotel. The fifth session of negotiations starts Monday at 11 a.m., with neither side able to predict the length of the negotiations, not even for a single day.
Volkswagen pushes for a 10% wage decrease from its employees due to the company's challenging situation, aiming to abolish incentives and perks as well. As a contingency plan, they are still considering plant closures and layoffs. IG Metall, in contrast, demands maintaining all facilities and job protection for their 130,000 employees. They categorically reject decreases in the monthly wage.
More Promising Conversation Tone
Though verbal, tensions have marginally eased in the previous wage round, as per VW's chief negotiator, Arne Meiswinkel. He noted positive developments and progress following seven hours of discussions. Sources suggest that substantial negotiations took place instead of just adopting entrenched positions.
IG Metall's chief negotiatior, Thorsten Groger, concurred with the more optimistic conversation atmosphere. However, both sides emphasized that they remain far apart on content. Cavallo, the working council chairman for IG Metall, who sits at the negotiation table, labeled the latest discussions as "conditionally open to shaping."
Threat of Widescale Escalation
Simultaneously, IG Metall is threatening further expansion of the warning strikes in the new year, should they fail to reach a settlement before Christmas. Groger stated, "It now falls upon the company to set the right course shortly before Christmas or face a significant escalation in 2025."
The previous wage round saw another warning strike at nine out of ten German VW facilities. IG Metall claims a total of 103,000 employees participated in the second strike, contrasting VW's report of 55,000 registered strike participants with the employment agency. IG Metall attributes these differences to discrepancies in reporting requirements for warning strike participants.
Agreement Before Christmas?
Is a resolution likely now? According to professional analyst Frank Schwope of Hannover University of Applied Sciences and Arts, speeding up negotiations before Christmas could inject movement into the stalemate situation. However, with the still significant gap in positions, an agreement before Christmas is highly improbable.
Schwope adds, "Sometimes, things can move quite quickly, though." A shift to a four-day or four-and-a-half-day workweek could be feasible. A similar approach was taken at VW in 1993 to prevent large-scale layoffs.
Christmas Holiday Pressure
The approaching Christmas holiday has historically increased pressure on VW to settle conflicts ahead of time. Last year, they and the works council reached key terms of an initial efficiency program on December 19 following lengthy negotiations. Unfortunately, it was found to be insufficient, compelling VW to implement further measures.
Power Struggle Resolved before Christmas
What adds to the pressure to reach an agreement this time: if no agreement comes regarding job security, a so-called "shadow wage" will resume in mid-2025, having been frozen since 1993. Afflicting half of the workforce that joined before 2005, it would inadvertently become more expensive for VW. "Handelsblatt" reports an average increase of 4.5% without a collective wage agreement, amounting to VW's approximately 1-2 billion euros.
Should this occur, VW has signaled the necessity of mass layoffs as early as July 2025. As a precautionary measure, they seek a transitional arrangement to prevent this. VW terminated the existing agreement, which has hindered mass layoffs since 1993, in September.
Warning Against Excessive Concessions
Industry expert Stefan Bratzel from Bergisch Gladbach warns against making excessive concessions this time as well. He fears that eventually, only minor adjustments will be agreed upon, which are not enough.
"Here, a little is tightened here, there a little is tightened," Bratzel worries. "However, not fundamentally, enabling VW to reclaim its position at the top." In his opinion, the worst-case scenario would be persisting problems only growing in severity over time.
In light of Volkswagen's proposed 10% wage decrease and abolishment of incentives, the Manufacture of motor vehicles could be significantly impacted if IG Metall's 130,000 employees refuse such changes.
Despite the positive developments and progress noted during the previous wage round, the Manufacture of motor vehicles at Volkswagen remains in a precarious position with both parties far apart on content.