According to Volkswagen's European and Global Works Council, the board told HR chiefs across the world to get ready for a pay freeze lasting to 2030, so salaries would stay pegged to 2026 figures. Labor representatives say the instruction has been in force since the start of October.
VW declined to comment, pointing to upcoming collective bargaining with IG Metall. The proposals were initially disclosed by Germany's Sueddeutsche Zeitung, and are likely to be moderated in negotiations.
The push sets up a tough round with IG Metall, which is seeking a 5% increase in negotiations focused on Volkswagen's German wage agreement that runs through December. Despite the distance between opening bids, the two sides have a record of settling pay disputes and want to avoid a long standoff while VW restructures and keeps plants operating.
Plant planning is another pressure point. Volkswagen has yet to assign new model production at Emden, Zwickau, Hannover and Audi's Neckarsulm sites for the 2031 to 2034 period unless alternative uses are found. Across Europe, thinner margins are a common headache, though smaller rivals like BMW have kept tensions in check while arranging redundancy packages.
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September brought a compromise with worker leaders that will take global job cuts to 100,000, around 15% of the workforce. In that month, VW trimmed its operating forecast for this year to a ceiling of 1% and outlined a goal of no less than an 8% operating margin by 2030, expecting to reach it via cost reductions and new profit sources.
Management is also streamlining the model lineup, cutting capacity and targeting savings worth billions of euros while it adapts to softer demand in China, US tariffs and fiercer competition in Europe. An idea to separate the Volkswagen passenger-car brand and the components units from Volkswagen AG was shelved in September due to labor worries about co-determination, though CEO Oliver Blume said last month that potential spin offs remain under review.
The bottom line: pay terms, staffing levels and plant allocations will shape margins and cash needs this decade, key inputs for tracking VW's path to that 8% operating target.
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