Volkswagen and German metal trade union finalize wage agreement, raise wages by 2.3% next year

According to foreign media reports, on April 13, a spokesperson said that Volkswagen, the largest car manufacturer in Europe, had reached a salary agreement with the German Metal Industry Union (IG Metall). The German Metal Industry Union is the most powerful union in Germany.

(Image source: IG Metall)

After 14 hours of negotiation in the fifth round of negotiations, the two parties reached an agreement that Volkswagen will increase its salary by 2.3% from January 2022, including a one-time 'new crown support fee' of 1,000 euros in June. This agreement covers approximately 120,000 Volkswagen employees, which is 18% of the total number of Volkswagen employees. The metal industry union once asked Volkswagen for a 4% salary increase, and last month rejected Volkswagen’s proposal for a 1.2% salary increase in 2022.

As the world’s second-largest automaker, Volkswagen’s share price has risen by more than 50%, getting rid of the impact of the new crown epidemic and the chip shortage that has hit the entire auto industry. However, many employers have issued warnings that if Germany cannot improve its competitiveness, it may lose hundreds of thousands of jobs, and said that there is limited room for salary increases.

In Germany, almost every major automobile manufacturer is a member of the employers’ association, while the German Metal Industry Association, which represents metal workers in the automotive industry and other industries, negotiates industry-wide contracts with the association instead of with Each company negotiates individually. Compared with American trade unions, this system gave German trade unions greater bargaining power. Every factory in the United States decides whether to form a union by voting.

However, the law does not require employers to join employers’ associations. This is just a practice. The American electric car company Tesla has stated that it has no intention of following such deep-rooted norms and does not want to cooperate with trade unions in Germany. The company usually prevents strikes by reaching an agreement with workers that is equivalent to industry-wide wages (plus stock options).