Volkswagen labour bosses allege management of violating deal

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Volkswagen works council has alleged top executives of violating a cost-cutting deal, risking the fresh problem at the German automaker as it continues to have hard time due to the emissions scandal.

In a letter to a Volkswagen brand chief Herbert Diess, observed by Reuters, the labour leaders stated he and workers boss Karlheinz Blessing had violated terms of November’s “future pact” by dismissing possible hirings in the very first half of 2017 and cutting short-term jobs faster and deeply than agreed.

“The ink on the agreements was barely dry, and brand management blatantly infringed the contracts and the spirit of the future pact,” a works council representative stated.

Volkswagen stated the pact will be executed, however there were most likely to be stress.

Europe’s biggest car manufacturer is under pressure to make cuts at high-cost operations in Germany to finance a shift to electric automobiles and mobility services as it aims to leave its emissions scandal behind, while still facing billions of euros in associated costs.

Managers and labour leaders concurred in November to cut 30,000 tasks at the Volkswagen brand in exchange for a commitment to avoid forced redundancies in Germany till 2025, an offer that leaves profitability still lagging competitors.

However the turnaround plan won’t yield the quick savings that Diess, who was referred as a cost-cutter at BMW, is looking for as Volkswagen courts financiers with a recovery method.

The future pact will result in 3.7 billion euros ($4 billion) in yearly savings by 2020 and raise the Volkswagen brand’s operating margin to 4 percent that year from an anticipated 2 percent in 2016– inadequate, experts say, noting the carmaker’s cost-cutting potential.

Management plans to ditch a pricey night shift for the top-selling Golf hatchback, which represented over half of the Wolfsburg factory’s output of 808,000 cars and trucks in 2016, also not going well with the future pact, according to the letter signed by works council boss Bernd Osterloh and 9 other labour representatives.

To push executives to comply with the November agreement, labour leaders stated they would stop cooperation on concerns such as overtime work, reducing the number of apprenticeships and potentially extending the workweek to 40 hours for engineers.

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