VW can cut 25 000 jobs with retirements

Volkswagen Group’s works council chief says the company can cut up to 25 000 staff over the next decade as older workers retire, to help the carmaker achieve the cost-cuts needed to revive the VW brand.

The German group’s top executives have been in talks with works council leaders who represent VW staff since June, in an attempt to agree on cost savings to fund the company’s post-diesel gate shift to electric vehicles.

Volkswagen is under pressure to make cuts at high-cost operations in Germany to fund this transformation, while still grappling with billions in costs for it semissions scandal.

Waiting for staff to retire is amore attractive option for VW workers than actual layoffs.

“We have the huge benefit of the baby boomer age groups,” VW labour head Bernd Osterloh said yesterday.

“That is why we can say the jobs of VW workers are safe.”

Volkswagen has said tens of thousands of staff from the 1950sand 1960s baby-boomer generation will come up for retirement in coming years.

VW declined to comment on Osterloh’s 25 000 target, which would represent about a fifth of its workforce in Germany.

Analysts said the savings from staff cuts of up to 25 000 would be a solid start, but must be accompanied by a reduction in purchasing costs and research and development spending to ensure a turnaround of operations.

“VW has no choice but to bring down costs massively,” Evercore ISI analyst Arndt Ellinghorst said.

“It must achieve cost savings of about ß22-billion (R347-billion)globally in coming years, and three quarters of that must be invested in its transformation.” Ellinghorst said VW could reap up to ß2.5-billion (R39-billion)with early retirements – a massive gain for the VW brand which is forecast to only make an operating profit of about ß2-billion(R32-billion) this year.