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Beginning of the end? Volkswagen makes drastic announcement: the end of job guarantees in its factories

Written by Alisson Ficher
Published 10/09/2024 às 18:58
Beginning of the end? Volkswagen makes drastic announcement: the end of job guarantees in its factories
Beginning of the end? Volkswagen makes drastic announcement: the end of job guarantees in its factories

Volkswagen is ending a three-decade-old agreement that guaranteed jobs at its factories. The decision, part of a cost-cutting strategy, sets the automaker up for a direct confrontation with unions.

In a move that could mark the beginning of a profound transformation in the German labor market, the Volkswagen, one of the pillars of the global automotive industry, surprises by announcing the end of an agreement that guaranteed job stability for workers in its factories.

The decision raises numerous questions about the future of the company and the automotive industry itself, leaving many wondering: How far will the impact of this measure go? The news, revealed recently, is a clear sign that the automaker is prepared to make radical changes.

Volkswagen ends three decades of warranties

On Tuesday (10), Volkswagen officially announced the end of an agreement that, for three decades, guaranteed the employment of workers in its factories in Germany until 2029.

This decision It is part of a broader cost-cutting strategy needed to address a range of challenges that are putting the German auto industry under pressure. Guarantees will end in 2025, and this marks a new phase in the company’s relationship with its employees and unions.

According to Volkswagen itself, the measure aims to align production costs in Germany to a more competitive level on the global stage. “We need a leaner cost structure,” said Gunnar Kilian, head of human resources at the automaker.

This change directly affects VW's main passenger car brand, which has already been struggling to adapt to the transition to electric vehicles, in addition to the slowdown in consumption.

Crisis and international competition

Volkswagen's situation is not unique. Other European automakers also face similar challenges, especially in relation to competition from innovative companies like Tesla and the rise of Chinese automakers like BYD.

The global electric vehicle market has become a race for leadership, and companies that are slow to adapt could face severe consequences. As experts have reported, VW factories are struggling to keep up with the new competitive reality.

The automaker, which employs nearly 300 people in Germany, faces additional hurdles. One of the main problems is the company's own governance structure, where half of the seats on the supervisory board are occupied by employee representatives.

Furthermore, the state of Lower Saxony, which holds 20% of Volkswagen's shares, often aligns itself with union interests, making any attempts at deep cost cuts difficult.

Confrontation with unions

According to newspaper Folha de S. Paulo, Volkswagen's decision has already caused an immediate reaction among workers. Daniela Cavallo, VW's main employee representative and member of the supervisory board, was emphatic in stating that the union will not accept this change without a fight.

“We will fiercely resist this historic attack on our jobs,” Cavallo said in a statement. She also assured that as long as unions have a voice, “there will be no layoffs.” That promise suggests the showdown between the company and workers is just beginning.

Furthermore, Volkswagen justified its plan to close factories by arguing that the market is no longer supporting the number of production units that the company has in the country.

With car sales falling, the automaker said it already has two more factories than necessary. This excess capacity may have been one of the factors that precipitated the decision to end employment guarantees.

Impact on the German labor market

The end of job guarantees does not only affect Volkswagen, but also has repercussions for the German economy as a whole.

Germany, known for its robust automobile industry, may face a broader restructuring in its industrial sector, especially if other companies follow Volkswagen's lead.

The transition to electric vehicles and global competition are forcing the country to rethink its labor and investment policies.

Meanwhile, the German government and trade unions have a difficult task ahead of them: negotiating the best possible conditions to avoid an employment crisis.

Analysts warn that Volkswagen's decision may be just the beginning of a broader movement of cuts and adjustments in the sector, with significant implications for the country's labor market.

Volkswagen's situation in Brazil

In Brazil, Volkswagen remains one of the main automakers in operation, with four factories and a consolidated presence in the national market.

Although the company also faces challenges related to the transition to electric vehicles, Brazilian factories are not directly affected by the recent announcement of cuts to employment guarantees in Germany.

However, the global scenario of the automotive industry, including the need to reduce costs and adapt to new technologies, may influence future decisions of the automaker in Brazilian lands.

Could the drastic changes in Germany be reflected in similar adjustments in Volkswagen's operations in Brazil, also affecting workers here?

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Alisson Ficher

Journalist graduated in 2017 and working in the field since 2015, with six years of experience in print magazines and over 12 thousand online publications. Specialist in politics, jobs, economics, courses, among other topics. If you have any questions, want to report an error or suggest a topic on the topics covered on the site, please contact us by email: alisson.hficher@outlook.com. We do not accept resumes!

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