Workers across the Volkswagen company in Germany went on strike earlier this week in partial protest at plans by the automotive giant to cut pensions.

The strikes come on the back of Volkswagen’s attempts to close three plants within Germany, as well as slash pensions for its workers. It is understood, from reporting from national broadcaster Deutsche Welle, that over 66,000 workers went out on what the union has promised will be the first of many strikes.

The workers are members of the IG Metall union, which is reported to be the largest union overall within Germany and the largest of its kind across Europe. In November, IG Metall negotiated a 5.5 per cent wage increase to take place over two years for employees of Mercedes-Benx, BMW, Siemens, and Thyssenkrupp.

Talks aimed at resolving the issues are set to take place next week. The firm is currently looking to cut personnel costs by a fifth as part of an overall drive to reduce outflows by €18bn. It is also looking to close three factories within Germany.

None of this is good news to Volkswagen. Just last week, the firm was reportedly forced to do a major writedown of its 21 per cent stake in troubled firm Northvolt. It has also issued a number of profit warnings this year, most recently in September.

Interestingly, last month the German publication Focus posted a breakdown of the money Volkswagen spends on its employees. It is a lot. Focus said the firm reported it spent €12.4bn on its employees in 2023, according to its own records. Along with wages, contributions to the government, and bonuses, this also included pensions. Focus said that 2023’s annual report for Volkswagen had further commitments of €29.7bn.

Focus also calculated that the pensions provision at Volkswagen accounts for about 9.2 per cent of the firm’s projected sales of over €320bn. All of it, that publication says, remains in order, with values below 15 per cent generally considered to be ‘okay’. The problem is that such liabilities hold the firm back from expanding and it also restricts investment.

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