Volkswagen to axe 30000 jobs after emissions scandal
Nov 29 2016 by Desiree Burns
German automaker Volkswagen and powerful labor unions have agreed to eliminate 30,000 jobs at its core brand VW in exchange for avoiding forced layoffs until 2025 in Germany.
An announcement is expected later Friday.
The job reductions will be at VW's own-brand unit and will not affect the group's other brands such as Porsche, Audi and Skoda.
The company announced a sweeping restructuiring plan Thursday, with a concentration of building electric vehicles in Germany and up to 30,000 job cuts worldwide. There will also be job cuts in Brazil and Argentina.
The leaders of labor agreed to these cuts as an exchange for the pledge by management to create 9,000 new jobs for the area of its electric auto division mainly within factories located in Germany.
We are tackling the problems at the root, even if it's painful.
"Norway's sovereign wealth fund holds a sizeable stake in VW and has been putting pressure on them to become more environmentally friendly." he said. "Today, we have shown that Volkswagen can and will change".
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The company fitted its cars with so-called "default devices" - software that detected when cars were being tested in lab conditions and adjusted the car's settings to make it more fuel efficient.
The crisis pushed the firm to its first loss in over two decades previous year. Thanks to this, VW does plan to hire on 9,000 new employees for electric vehicle projects and to focus on future technology.
The agreement foresees 3.7 billion euros ($3.9 billion) in annual savings at VW's namesake brand, a step which involves 23,000 job cuts in Germany alone, another source said.
The works council's chairman, Bernd Osterloh, said it had "ensured that these future vehicles are built in Germany and not overseas. That will be made clearly without forced redundancies", the statement said.
VW shares rose 2.1 per cent on the news, as analysts and investors reacted with cautious optimism to the plan.
"It's painful but it's the right decision", he said.
In response, Volkswagen has agreed to pay $15 billion to US authorities and owners of some 500,000 vehicles with software that turned off emissions controls. And VW faces legal and regulatory cases worldwide.