VW and IG Metall are meeting in Hannover today for a new negotiating marathon, aiming to settle the dispute over collective agreements at Volkswagen before Christmas.

Volkswagen insists on cutting wages by 10%, eliminating certain gifts and bonuses, as well as closing factories and laying off workers. IG Metall, on the other hand, is calling for the preservation of the factory units, but also job guarantees for the company’s approximately 130,000 workers, while rejecting any permanent wage cuts.

Negotiations in a more constructive climate

After the last round of negotiations, however, both sides seemed somewhat more accommodating. After seven hours of negotiations, the head of VW’s negotiating team, Arne Meiswinkel, spoke of constructive talks, adding that progress was being made. According to negotiating circles, this round saw real negotiations – whereas until now the two sides had merely reiterated their positions.

Torsten Greger, head of IG Metall’s negotiating team, also said the mood in the talks was clearly more constructive. Both sides pointed out, however, that the negotiations are far from a meaningful rapprochement.

Threats of new warning strikes

At the same time, IG Metall is threatening that if no agreement is reached by Christmas, it may carry out significantly more warning strikes in the new year. “It’s like this: either the company will fix the situation before Christmas or in 2025 we will go into a big scaling phase,” Greger clarified.

The previous round of negotiations was accompanied by new warning strikes at nine of VW’s ten German factories. According to IG Metall, a total of 103,000 workers participated in them, while VW reports that only 55,000 workers had declared their participation. According to the union the discrepancy in the two numbers is explained by the fact that there is no agreement on whether and when workers are required to declare their participation in warning strikes.

Will a deal be reached before Christmas?

So will there now be significant progress in the negotiations? According to Frank Schwope from the Hannover School of Small and Medium Enterprises, there could indeed be progress in the talks – but given that the two sides’ positions are “still too far apart”, it is very difficult to reach an agreement before Christmas. Nevertheless, of course, “sometimes things evolve very quickly”, adds Swope.

A feasible scenario would be, for example, to reduce the working time to four or four and a half days a week – a similar solution also prevented mass layoffs at VW in 1993.

There have been other times in the past when the Christmas holidays have helped put pressure on VW to resolve conflicts. A year ago, for example, and after months of negotiations, agreement between the business group and the works council on a program to improve the company’s efficiency was reached on December 19 – although that program soon proved insufficient, with VW to decide to take even more measures. Both sides in the current dispute have also made it clear repeatedly that they are aiming for a deal by the holidays.

The “frozen” wage regulations of 1993

This time, however, there is one more factor that makes it even more imperative to reach a deal for VW: in the event that there is no deal on the employment guarantee, certain wage regulations that had been “frozen” will come into force in mid-2025. since 1993.

Then the German company will have even more expenses, instead of becoming more efficient. These “shadow” regulations, as Handelsblatt describes them in a related report, concern about half of the workers who have been in the company since 2005. According to the German media, if these regulations actually come into force, the cost for the VW would grow by 4.5% – the business would end up with around one to two billion euros more in expenses. For its part, VW is threatening that, if things really get to that point, the company will be forced to make layoffs.

Concern about making too many concessions

Stefan Brätzel from Bergis Gladbach’s Center of Automotive Management (CAM) expresses his concern that there will be an agreement in the end that will allow only limited measures to be taken, which will be insufficient.

“There are some small changes here and there – but not so much that VW can get back on top,” Bratzel says. “And in my view this is the worst case scenario” – because in a few years the problems will be even bigger.

Edited by: Giorgos Passas