Volkswagen and IG Metall Brace for Pivotal Pay Talks Amid Factory Closure Fears

Volkswagen and IG Metall are set to begin pay negotiations, which could influence potential layoffs and factory closures in Germany. High energy and labor costs, labor shortages, and rising competition have exacerbated tensions in the industry. Other German automakers, like Mercedes-Benz and BMW, are also feeling the pressure.

Volkswagen and IG Metall will initiate critical pay talks on Wednesday, potentially deciding the future of layoffs and factory closures in Germany. Tensions are high following earlier announcements of possible plant closures, pitting Europe's largest automaker against the labor union's fierce resistance.

The talks are crucial as IG Metall negotiates new labor deals for VW's 130,000 workers in Germany, especially after VW ended agreements safeguarding employment at six western German plants. Volkswagen cites high energy and labor costs as disadvantages compared to European and Chinese competitors targeting Europe's electric vehicle market.

These negotiations occur while Germany's industry grapples with high costs, labor shortages, and increasing competition. Major firms like BASF and Thyssenkrupp are trimming their operations, and other automakers like Mercedes-Benz and BMW have also slashed profit forecasts citing weak demand in China.

(With inputs from agencies.)