Volkswagen plans to freeze pay through 2030, works council calls it 'absurd'

IG Metall says the freeze would hit more than 660,000 workers worldwide, including 275,000 in Germany.

Volkswagen plans to freeze salaries until 2030, according to the company's Global Works Council. The council said the move would cover more than 660,000 workers globally, including 275,000 in Germany, and called management's approach "absurd," adding it expects strong resistance to what it called a "rather unrealistic" plan to carry it out.

The freeze directive has been in effect since early October and replaces a budgeting approach that had allowed pay to be adjusted for inflation and for locally negotiated increases, the Global Works Council said. An IG Metall spokesperson said pay is decided at the negotiating table, not by decree from the executive boardroom, and the union has warned the freeze could cost affected workers at least 10% of their buying power to inflation over the next four years.

Current labor protections and an existing truce run out on January 1. Unions have threatened to escalate with strikes once that truce ends, and talks on a new collective bargaining agreement covering Volkswagen's in-house pact and the wider regional metal and electrical industry deal, which also covers Audi and MAN, are expected to start in late November. Works Council President Daniela Cavallo asked management on Sunday evening to explain the plan to employees. Volkswagen declined to comment on the reports, calling them speculation, and said a new round of talks later this week would be the venue for any labor-cost proposals.

The freeze is the sharpest cost-side move yet in a dispute that has already gone from stalled talks to terminated collective pacts and a flat rejection of IG Metall's 5% wage demand. It comes after Volkswagen disclosed a deliveries slump, and it signals management is unwilling to trade labor peace for cost relief even with that slump on the books, which raises rather than lowers the odds of the strike action IG Metall has been preparing. The freeze does nothing to offset the separate pressures the company already faces, including a hit from UK motor finance liabilities and a projected 20% contraction in demand in China, so it reads as another front opened rather than a resolution to the ones already running.