Volkswagen, employee representatives reach wage deal after tough negotiations

FRANKFURT, Germany (AP) — Volkswagen's employee representatives said Friday they have reached a wage deal that wards off management proposals for plant closings in Germany and bars involuntary layoffs through 2030.

The company said the deal includes provisions to shed more than 35,000 jobs in “socially responsible” ways by 2030, the dpa news agency reported.

Union and employee representatives were slated to hold simultaneous news conferences Friday to spell out details of the agreement reached after almost 60 hours of negotiations this week as the two sides pressed to reach a deal before the Christmas holidays.

Thorsten Groeger, negotiator for the IG Metall union, said employees also accepted “painful concessions." A union statement said that the loss of bonus payments and other compensation were part of the deal but that monthly wage levels would not be touched. The company had pressed for a 10% wage cut.

Volkswagen argues that it must lower costs in Germany to levels achieved by competitors and by Volkswagen plants in eastern Europe and South America. The company had demanded a 10% pay cut for 120,000 German workers and has said it can’t avoid shedding factory capacity that is no longer needed.

The company is facing a drop in demand in Europe, higher costs and increasing competition from Chinese automakers. Volkswagen built factories to supply a European car market of 16 million in annual vehicle sales, but now faces demand for around 14 million, the company has said. That represents a loss of 500,000 cars a year, or the output of two factories.