Skoda union rejects wage freeze through 2030 as Volkswagen seeks cost cuts
Key Facts
The Kovo union at Skoda Auto rejected a demand to freeze wages through 2030, in a dispute over compensation at the Volkswagen subsidiary as the group seeks to cut costs. According to a union statement, the demands also cover bonuses and allowances, alongside wages. At group level, Investing cited the works council as saying Volkswagen plans to freeze wages for its 660,000 employees worldwide through the same date. The measure was included in the proposal announced in October 2026, while Skoda's union opposes the demand affecting employees of the Czech brand. The dispute over wages and other compensation components coincides with a broader group plan covering profitability, the workforce and the European production network.
The union's stance at Skoda follows an increase in its global deliveries in the first half of 2026, according to Volkswagen data. The Czech brand delivered 555,700 vehicles, compared with 509,400 in the corresponding period of 2025, posting year-on-year growth of 9.1%. Over the same period, total group deliveries moved in the opposite direction, falling 6.3% year on year. Volkswagen's global deliveries stood at 4,125,700 vehicles, compared with 4,405,400 a year earlier, according to the group's official statement. Skoda thus recorded an increase in vehicles delivered to customers during a period when its parent's total worldwide deliveries contracted.
On profitability, Skoda achieved an operating margin of 8.5% in the first half of 2026, according to an official Volkswagen presentation on profitability targets. The group's future plan targets an operating margin of 9% by 2030, according to its statement on the plan. The restructuring includes an adjustment to the group's workforce, estimated in an analysis of the plan at about 50,000 jobs. Volkswagen said the adjustment also includes management positions and represents an additional measure beyond programmes already in place. The group is thus placing its profitability target within a programme addressing management jobs alongside the rest of the workforce, with a timeline extending to the end of the decade.
Behind the restructuring measures, Volkswagen acknowledged in its plan announced in September 2026 that its European production capacity exceeds demand by more than 500,000 vehicles. Its programme includes developing a blueprint for a sustainable and competitive European production structure, alongside workforce measures. In the current round of wage negotiations, the union is demanding a 5% increase, which Volkswagen rejects, citing the need to cut costs. The company said in its statement: "Volkswagen firmly rejects the union's demand for a 5% wage increase." This negotiating dispute is unfolding alongside the Kovo union's rejection at Skoda of the demand to freeze wages and other compensation demands.
The next steps begin with Volkswagen formally giving notice to terminate several collective agreements effective 31 December 2026, paving the way for negotiations on amendments. Reuters quoted a statement by the union and works council in Germany as saying: "IG Metall and the works council have announced their opposition, and a heated confrontation looms at the start of the year." The stance came amid the dispute over terminating wage agreements and cutting jobs in Germany. At Skoda in the Czech Republic, base wages are governed by a collective agreement with the Kovo union, and the current agreement remains valid until the end of March 2027, according to the union's statement. After that, the end of June 2027 marks Volkswagen's deadline for developing a blueprint for a sustainable and competitive European production structure.