Volkswagen AG (VW) and Germany’s industrial union have agreed to increase wages 4.8 percent by next year in an economy where the cost of living is flat — the kind of raises that could help the 19-country eurozone lift inflation from dangerously low levels.
The company on Friday said that about 120,000 workers would get 2.8 percent more on Sept. 1 and then another 2 percent on Aug. 1 next year.
Volkswagen is struggling to overcome the costs of a scandal over cars equipped with software that enabled them to cheat in diesel emissions tests. The company deducted 16.2 billion euros (US$18.1 billion at current exchange rates) from its earnings last year to cover recalls and other costs for 11 million cars sold with the software.
However, worker representatives have been adamant that they should not pay the price for management’s mistakes. The Volkswagen deal broadly tracks a nationwide deal for raises of 2.8 percent and 2 percent for 3.8 million factory workers, although the dates of the increases are different. Volkswagen typically opts out of the national deal and makes its own agreement with its workers.
The company has pledged to accelerate efforts to become more nimble as it seeks to move beyond the worst crisis in its corporate history. It plans to abandon old habits like centralized decisionmaking and is to become more open to co-operation with other companies in a new strategy being unveiled in the middle of next month.
More than 250 employees are developing the plan, which is to comprise eight key initiatives across the group through 2025, chief executive officer Matthias Mueller said on Friday, according to excerpts of a speech at an internal management meeting at the automaker’s Wolfsburg headquarters.
“The focus of our Strategy 2025 will be the customer with his wishes and needs,” Mueller said. “In the end, a strategy is only good if it leads to products that excite people and that they want to buy.”
Additional reporting by Bloomberg
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