Volkswagen and labor unions agrees to cut 30,000 jobs

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Volkswagen and its labor unions consented to cut 30,000 jobs at the core Volkswagen brand in exchange for a commitment to prevent forced redundancies in Germany till 2025, a compromise which leaves the automaker’s success still lagging competitors.

The turnaround plan revealed on Friday will result in 3.7 billion euros ($3.9 billion) in annual savings by 2020 and raise the Volkswagen’s operating margin to 4 percent that year, from an anticipated 2 percent this year.

That target still remains below competing European automakers such as Renault and Peugeot Citroen, which is aiming an operating margin of 6 percent in 2021.

Volkswagen, Europe’s biggest automaker, is seeking to move beyond an emissions-cheating scandal that has stained its image and left it dealing with billions of euros in fines and settlements.

The cuts featured a management promise to create 9,000 new jobs in the area of battery production and mobility services at factories located in Germany as part of efforts to shift toward electric and self-driving vehicles.

“We have to invest billions of euros in new cars and services while new rivals will attack us – the improvement will definitely be more extreme than whatever we have experienced to this day,” Volkswagen brand CEO Herbert Diess stated.

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