VW Cuts Thousands Of Jobs To Finance The Electric Transition

German automaker Volkswagen announced on Wednesday it would cut thousands of jobs to face the transition to electric and autonomous driving right after the announcement of higher profits, noting that the investments involved additional savings.

CEO Herbert Diess announced Tuesday in 2018 the increase in sales and profits in the expanding 12-brand group, the third year after the dieselgate fraud scandal. But it was up to VW’s chief operating officer, Ralf Brandstaetter, to announce that the main division would cut between 20,000 and 7,000 jobs in 2023 when it comes to cost savings.

All cuts come from non-replacement of employees who were nearing the end of their retirement, Brandstaetter said. “As more and more routine tasks are automated, we will need fewer tasks in administration,” he added.

At the same time, VW plans to create 2,000 new jobs in software and electronics development.

Overall, the plan would help “fund our investments and reach our goals for the electric age,” said CFO Arno Antlitz. Volkswagen employs 665,000 people across the group, including nearly 50,000 in administrative functions. VW said it has opened constructive discussions with employee representatives to determine exit in the coming years.

Chairman of the workers’ council, Bernd Osterloh, said in a statement that he was happy that hardworking colleagues that have been for a long time are getting early retirement. But those first deviations should be only voluntary and occur when the task is abolished. Otherwise, employees are entitled to another job, according to the guarantees issued by management to unions by 2025.

Leaders generally strive to appear hand in hand when it comes to social issues with employee representatives such as Osterloh, sometimes described as more powerful than the CEO, owing to the peculiarities of VW’s governance structure.

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