Temporary turbulence The Battle Over Volkswagen's Workforce

As Volkswagen cuts costs, when it comes to temporary employees, VW's works council doesn't appear to be in the mood for compromise.
Workers on the Volkswagen assembly line in Wolfsburg. Photo: Kristoffer Finn/STERN

Volkswagen's works council met on Monday with the company's management board in a last ditch bid to salvage negotiations over the company's “future pact” and the associated cost-cutting measures.

At the center of the dispute are Volkswagen's plans for its temporary workforce, which had been agreed on last November. Volkswagen labor leaders have argued that workers on short-term contracts should be hired on a permanent basis after three years. Management is only willing to agree on the condition that the number of overall permanent employees is reduced. This stance has caused labor leaders to halt negotiations last week, throwing the "future pact" into question.

The works council and the management board adjourned their meeting on Monday without reaching an agreement.

In an internal letter to VW employees obtained by Handelsblatt, Chief Executive Matthias Müller said the dispute shouldn't be carried out in the media.

"The Volkswagen that we find in the media these days is not the company that I know and is near and dear to me," Mr. Müller said.

The chief executive promised to do everything he could to find a constructive solution to the dispute.

Volkswagen is grappling with the fallout of the Dieselgate scandal and faces €20 billion in fines and compensation although this may increase as investigators continue to probe the extent of the cheating of emissions regulations.

In November, the works council and managers had agreed to annual cost-cutting measures of €3.7 billion, or $3.9 billion. The company is planning to cut some 23,000 jobs by 2020.

The economic situation of the company does not leave much leeway. Herbert Diess, VW brand manager

Despite the setback, Herbert Diess, who heads the VW brand, appeared optimistic about coming to an agreement. For Mr. Diess, there would always be differing positions in the implementation of a project like the future pact.

“We will settle this in a reasonable way with all stakeholders,” he wrote in a letter to VW staff.

According to  sources within the company, Volkswagen is planning to permanently hire 2,000 of the 5,700 temporary workers currently at the company. It is also possible that the company could make concessions elsewhere.

In his letter, Mr. Diess defended the course of action, arguing that not as many temporary workers can be hired on a permanent basis as in the past.

“The economic situation of the company does not leave us much leeway,” he said. “Retaining large amounts of temporary workers would once again raise the pressure for cutbacks in the core workforce.”

However, when it comes to temporary employees, the works council doesn't appear to be in the mood for compromise. In a letter sent to all 120,000 VW employees in Germany, the labor leaders wrote that company management had “torpedoed” the hiring of temporary staff after the point had been firmly agreed.

“The VW brand manager is acting without a sense of social responsibility, breaking his word in the implementation of the future pact and taking solutions we had already negotiated off the table," the works council wrote.

Meanwhile, the former VW chairman of the supervisory board, Ferdinand Piëch, has refused to make a statement to the parliamentary commission currently investigating the Dieselgate scandal.

Mr. Piëch's lawyer, Gerhard Strate, said it would be inappropriate “to comment publicly on rumors about the alleged contents of the legal examinations” in the case. Mr. Piëch recently accused former VW CEO Martin Winterkorn of knowing about rigged diesel engines months before the scandal broke.


Stefan Menzel writes about the auto industry focusing on Volkswagen. To contact the author: [email protected]