Volkswagen scraps a slew of labor agreements as standoff with unions intensifies

German automotive giant Volkswagen on Tuesday said it was scrapping six labor agreements as the company’s standoff with unions and its works council intensified.

“The company sees itself forced to do so because of the current economic challenges,” Volkswagen said in a statement translated by CNBC.

Volkswagen said it was ending its employment protection agreement, which has been in place for its German workforce since 1994, as well as a wage agreement for employees with specialist or leadership positions.

It also said it was scrapping agreements for temporary workers and those stipulating that the company must take on apprentices who have completed their training.

“The current phase contributes to uncertainty. We can counter this if we create future proof perspectives for our company soon. That applies to the company as well as the wage agreement levels,” Volkswagen human resources chief Gunnar Kilian said in the statement.

Job security for employees remains in place until 30 June 2025, Volkswagen said, adding that it would now start negotiations with worker representatives.

In a statement released Tuesday, VW Works Council head Daniela Cavallo reiterated that there would be pushback to Volkswagen’s plans.

“Now the company has actually done what we have been expecting for days. And it remains the same: we will put up a fierce resistance to this historic attack on our jobs. With us, there will be no layoffs,” she said.

Thorsten Gröger, lead negotiator at trade union IG Metall, said Tuesday that there will be objections to the end of the employment protection agreement and the potential closure of plants in particular.

“A job guarantee is not only needed during good times, but especially in the current challenge it should be an airbag for colleagues. Now, when the road is slippery and there are more and more obstacles on the road, VW is taking away this airbag. We will not accept this silently and without action,” he said in a statement translated by CNBC.

It comes as European car giants contend with a perfect storm of challenges on the path to full electrification.

Volkswagen last week flagged it was no longer able to rule out closing plants in its home country of Germany — a measure that was previously considered off the table.

The carmaker said at the time that it was acting in order to secure “urgently needed structural adjustments for greater competitiveness in the short term.”