Volkswagen terminates 10 labor agreements and seeks longer hours to cut German wage costs

Cancellation of collective agreements

On 30 September 2026, Volkswagen terminated ten collective bargaining agreements with the industrial union IG Metall, including its core framework agreement (Manteltarifvertrag). The framework agreement establishes essential labor standards, including standard working hours, paid vacation days, and wage supplements across German operations. Company leadership stated that terminating the agreements creates formal space for negotiations to address widening cost disadvantages. The move affects approximately 130,000 employees across Volkswagen's domestic facilities.

Executive push for longer working hours

Volkswagen chief executive Oliver Blume proposed increasing working hours for German staff to align production costs with foreign competitors. Speaking to the media outlet The Pioneer, Blume stated that German labor costs are roughly twice as high as those in other European nations where Volkswagen operates. The executive identified two primary methods to reduce expenses: increasing weekly working hours without wage compensation, or raising annual working time by reducing vacation entitlements.

“This is what needs to be negotiated in the coming weeks and months.”

The standard work week across tariff-bound companies in the German automotive industry is 35 hours, though it is not a statutory requirement. Company sources indicated that longer regular shifts would lower labor costs in divisions requiring overtime and external hiring, while departments with excess personnel would not see hour increases.

Financial deterioration and factory closures

The contract terminations follow a restructuring package approved by Volkswagen's supervisory board in late August 2026. The plan outlines billions of euros in payroll reductions, potential closures of up to four assembly plants, and the elimination of up to 50,000 positions. Helena Wisbert, professor of automotive economics at Ostfalia University of Applied Sciences, stated that a financial bottom was originally projected for the second half of 2026, but conditions worsened. Following a profit warning in September 2026, the carmaker expects an operating return on sales of 1% for 2026.

“Volkswagen now really has to turn over every stone and also tackle such contracts in order to make the group cost-competitive again.”

Beyond labor contracts, the company is evaluating the sale of business units and the shutdown of subsidiary entities to maintain liquidity against shrinking sales volumes.

Union pushback and strike preparations

Labor representatives responded with immediate protests across German facilities. At the vehicle manufacturing plant in Zwickau, employees walked out of an internal works meeting following news of the cancellations. Daniela Cavallo, chair of the Volkswagen General Works Council, pledged to defend established benefits and oppose cuts to salaries and working conditions. IG Metall officials in Lower Saxony criticized corporate management for leaking contract cancellations to media outlets before presenting concrete bargaining demands to worker representatives. Because the canceled agreements expire at the end of December 2026, IG Metall warned that industrial strikes could begin across German plants in early 2027.