Volkswagen plans to freeze pay worldwide until 2030, German trade union IG Metall said on October 19. The proposal would affect hundreds of thousands of employees as the carmaker pursues further cost cuts. Volkswagen declined to comment on the plans.

IG Metall said the executive board had instructed human-resources managers worldwide to hold current collectively agreed pay levels and suspend increases. According to the union, the instruction has been in force since early October.

Internal guidelines target pay and benefits

The German newspaper Süddeutsche Zeitung reported the proposed freeze, citing internal documents setting out Volkswagen’s Group Target Picture strategy. The documents describe new guidelines for international pay negotiations applying from the fourth quarter.

The reported guidelines also call for reductions in variable pay, special payments and benefits, alongside job cuts. They allow for different conditions across the group, while requiring all brands, regions and sites to contribute to savings.

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IG Metall put the group’s worldwide workforce at more than 660,000, while some media reports gave a figure of about 600,000. Reports said around 275,000 employees in Germany could face further restrictions under the plans.

IG Metall warned that affected employees could face real-income losses of at least 10% if the plans are implemented. How many workers would ultimately face a freeze, and how it would apply across the group, remains uncertain.

Volkswagen points to upcoming negotiations

Volkswagen said it would not comment on speculation. The company said collective-bargaining matters should first be discussed internally during negotiations.

The European and World Group Works Council, an employee representative body, called the approach absurd. It said employers had not yet set out their bargaining position and argued that personnel costs represented only a small share of sales costs.

Negotiations on a new pay agreement are expected to begin in late November. IG Metall is demanding a 5% increase.

The union said talks would cover both Volkswagen’s company-level agreement and the metal and electrical industry agreement. The latter also applies to Audi, MAN and Porsche.

Pay dispute accompanies wider job cuts

Volkswagen terminated almost all its collective agreements shortly before the upcoming negotiations. Its executive board also plans to cut another 50,000 jobs worldwide in the coming years, on top of earlier reduction plans.

Specific job-cut programmes must still be negotiated with employee representatives. The previous bargaining round in 2024 also brought a pay freeze for about 130,000 Volkswagen employees, with a two-stage 5% increase directed into a fund rather than employees’ accounts.