Volkswagen cancels decades-old job security deals with labour

German auto giant Volkswagen formally terminated a three-decade-old job security deal with labour on Tuesday, opening the door for compulsory redundancies at the company from July 2025.

Volkswagen Europe's largest car manufacturer, also cancelled deals guaranteeing employment for trainees and regulating temporary work for the company.

Volkswagen had previously announced that it could not rule out potential plant closures or lay-offs because of major challenges currently facing the company.

The automaker has struggled to manage the shift to electric vehicle production, declining prospects in the important Chinese market and tough new competition from rising Chinese automakers. Volkswagen's financial performance has lagged behind other brand within the Volkswagen Group, which also includes Škoda, SEAT, Audi and others.

The company said it hopes to negotiate new wage agreements and other deals with the trade union and works council to replace the cancelled agreement by the time it lapses next year.

Volkswagen has never closed a factory in Germany, and has not shut down a plant anywhere in the world since 1988.

"This period now gives us the opportunity to find solutions together with employee representatives on how we can make Volkswagen competitive and fit for the future in the long term," Volkswagen HR Director Gunnar Kilian said in a company statement.

The company said that it has agreed to IG Metall trade union's offer to bring forward collective bargaining talks on pay at Volkswagen forward and extend the negotiations to include the job security deals that have now been terminated.

Labour leaders have vowed to put up an intense fight against any plant closures or major cuts to the Volkswagen workforce.

"We will fiercely defend ourselves against this historic attack on our jobs. There will be no compulsory redundancies with us," Works Council Chairwoman Daniela Cavallo said on Tuesday.