Volkswagen works council reveals plan to freeze pay for 660,000 employees until 2030
Key Facts
Volkswagen's works council said the company plans to freeze pay for about 660,000 employees worldwide, Reuters reported, as the group presses ahead with restructuring. The proposed freeze would run until 2030 and cover employees across the group globally, according to the council. Volkswagen declined to comment on the plan, describing the reports as "speculation". The works council expects strong resistance to the proposal as management seeks to keep wages unchanged throughout that period. The council described implementing the plan as "largely unrealistic", challenging the feasibility of the freeze it disclosed.
IG Metall, meanwhile, is seeking a 5% pay rise in the current round of negotiations with Volkswagen. The union wants the increase to apply under a one-year agreement, according to its published demands for the company talks. A union spokesperson said "wages are settled at the negotiating table, not by a decision imposed by executive management". Citing the company's annual report, the union said the personnel expense ratio stood at 17.5% in 2021. It added that the ratio fell to 15.2% in 2025, citing the decline in support of its wage demands.
The wage confrontation follows a decline in the group's operating profit to about 5.9 billion euros in the first half of 2026, according to Volkswagen's results. That represents an 11.6% drop from operating profit of 6.7 billion euros in the corresponding period of 2025. The group's operating margin was 3.8% in the first half of the year, according to the financial report. Volkswagen recorded vehicle sales of 4.0 million in the same period of 2026. Sales fell 8.4% from 4.4 million vehicles in the first half of 2025, according to key figures published by the group.
Volkswagen links the need for restructuring to geopolitical tensions and rising costs, according to the statement outlining its transformation plan. The group said tariffs were the main driver of the cost increases it faces, among the reasons it gave for the plan. The transformation plan includes workforce adjustments affecting about 50,000 jobs across the group, according to details announced by the company. Those adjustments also extend to management positions, bringing those roles within its scope alongside the rest of the affected workforce. Volkswagen aims to achieve an operating profit margin of 9% by 2030, according to its announced transformation targets.
On production, the group says its European capacity exceeds demand by 500,000 vehicles, according to its assessment in the transformation plan. That represents excess production capacity at its European plants relative to the demand on which the company bases its restructuring. Volkswagen aims to align production capacity across its brands with demand at about 9 million vehicles annually, according to its statement. Alongside the decline in profit and sales, the automotive division generated positive net cash flow of 3.2 billion euros in the first half of 2026. That compares with negative net cash flow of 1.4 billion euros in the corresponding period of 2025, according to the group's results.
A Volkswagen spokesperson said a round of talks later in the week the report was published would provide a forum for proposals on labour costs. Rules governing regional wage agreements allow them to be terminated on 31 December 2026, according to dates published by IG Metall. Terminating those agreements requires two months' notice under the same rules. As part of the restructuring, the group intends to develop a blueprint for a sustainable and competitive European production structure by the end of June 2027. Volkswagen has set 29 October 2026 as its next financial reporting date, when it will publish results for the first nine months of the year.