Showdown: Volkswagen and Union Clash Over Job Cuts and Pay Raises

Union leaders have threatened strikes and warned Volkswagen against closing plants as they begin pay negotiations. Tensions are high with IG Metall Union, representing VW's 130,000 workers. Volkswagen cites high costs, seeking to remain competitive, while IG Metall demands a 7% pay rise and job security.

Union leaders threatened strikes and warned Volkswagen on Wednesday against an 'historic mistake' as pay talks kicked off, likely determining the future of layoffs and plant closures in Germany. Europe's biggest automaker is at a crossroads with IG Metall Union over potential factory closures.

At the heart of negotiations, IG Metall must secure new labor deals for VW's 130,000 German workers. The union has committed to battling job cuts, attributing Volkswagen's troubles to top management and insufficient governmental support. Threatening strikes from December, the union demands a 7% pay increase.

Volkswagen argues that high energy and labor costs put them at a disadvantage compared to European and Chinese competitors targeting the electric vehicle market. The negotiations, held at Schloss Herrenhausen, coincide with broader industry challenges including high costs and labor shortages. As Germany's economy grapples with these hurdles, Volkswagen's standoff with the union has also caught the attention of the coalition government ahead of the next federal elections.

(With inputs from agencies.)