(Bloomberg) -- Volkswagen AG Chief Executive Officer Oliver Blume told workers that current union proposals to cut costs offer a starting point for negotiations but don’t go far enough to address flagging competitiveness at the carmaker’s namesake brand.
“We, the management, are not operating in a world of make-believe,” Blume told thousands of workers gathered at an assembly in Wolfsburg. “We are making decisions in a rapidly changing environment. We are concerned about the future of our company.”
VW workers took part in nationwide walkouts on Monday to put pressure on Blume and his board members, who have threatened a blanket 10% pay cut and unprecedented factory closures in Germany as part of a massive restructuring at the brand. German union IG Metall estimated about 100,000 workers walked off the job, and said that about 20,000 attended the assembly on Wednesday.
Daniela Cavallo, Volkswagen’s works council chief, said both sides need to find trade-offs in order to reach a deal before Christmas. “That will mean compromises. And concessions. Things that you don’t like and that sometimes hurt you,” Cavallo told workers at the assembly.
VW and its workforce launched early collective bargaining talks in September, after management said it needed to close factories in Germany and end job security agreements to address a drop in EV demand, rising operational costs and intensifying competition.
Management last week dismissed a counter-proposal from labor — a €1.5 billion ($1.6 billion) package of additional cuts that included lower dividend payouts, reduced bonuses and funneling wage increases into a fund to pay for possible layoffs and shift reductions.
German Labor Minister Hubertus Heil also weighed in on Wednesday, saying VW should find a fair solution that doesn’t involve forced layoffs. Heil’s party, the Social Democrats, is in the midst of a political battle after the three-way coalition it led collapsed last month, setting up new elections for late February.
VW’s corporate structure gives workers a strong voice in key decisions, making it difficult for management to push through painful cost cuts. Employee representatives occupy half of the company’s supervisory board seats, while VW’s home state of Lower Saxony holds an additional two seats.
(Updates with details throughout.)
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