Berlin, Germany

Under a plan to cut bonuses, managers at Volkswagen (VW) are set to see their pay cut 10 percent 2 years in a row, according to report in the Sueddeutsche Zeitung on Sunday. The measures are under a wider restructuring deal to shed jobs and scale back output at Germany’s biggest automaker.  

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The report also said bonus reductions, affecting 4,000 managers, will go into effect in May 2025 and 2026. After that, pay will decline by 8 percent in 2027, 6 percent in 2028, 5 percent in 2029.  

VW did not immediately comment on the report. Volkswagen’s employee works council and representatives from the powerful metalworkers’ union, IG Metall, could not be reached immediately for comment.  

That follows swiftly from Volkswagen's announcement Friday of sweeping operational changes in Germany. A reduction in production capacity and loss of over 35,000 future jobs is part of an agreement with unions, Advance reported over the weekend. The shift comes as costs rise and demand falls, as well as amid global competition, hoping to avoid strikes that could lead to mass absenteeism, which would jeopardise operations.  

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As German industry worries over a combination of economic slowdown, rising energy costs and strict rules, Volkswagen's latest cost cutting measures are an indication of broader unease about the state of Germany's industrial economy. The restructuring deal comes after days of intense negotiations with unions in a spotlight of management-worker tensions at Europe’s biggest carmaker.  

VW's restructuring plan is now hit with the reported pay cuts for managers. Of course, German companies tend to rely on the higher levels of collective agreements with unions concerning a wider workforce. The teeing up of management pay illustrates how adrift VW is in restoring competitiveness.  

These cuts are part of a broader strategy at VW to focus on reducing fixed costs and adapting to the industry's accelerating transition toward electric vehicles and digitalisation. Despite the tumultuous period, VW remains committed to retaining its leading position in the global automotive market. Further official statements from the company and unions are anticipated in the coming weeks.