Volkswagen will eliminate 4,000 jobs to boost more digital jobs

Volkswagen is planning on eliminating 4,000 general and administrative jobs while adding at least 2,000 positions in information technology over the next four years, thus preventing layoffs in its German factories as it undertakes a major change towards electrification and autonomous automobiles.

The measure, negotiated with Volkswagen’s powerful unions, includes labor guarantees until 2029, the automaker said in a statement. The brand will depend on partial retirement and natural personnel losses to achieve specific workforce reductions as it eliminates models and focuses on new technologies that require fewer factory workers.

Along with cuts from previous jobs, Volkswagen is moving ahead as planned with a plan announced in March to boost profits in millions of dollars a year, the unit’s operations director, Ralf Brandstaetter, said in the statement, “We are adapting the company to the digital era in a sustainable way.”

The prospect of deeper cuts had alarmed VW union leaders as manufacturers faced the transformation of large industrial operations. Application-based services such as private car travel and carpooling are already threatening the traditional business model of individual car ownership, a trend that can be accelerated when autonomous vehicles reach an adequate level, and electric cars require fewer parts and workers for assembly.

The labor guarantee is “an important signal,” said Volkswagen company chief Bernd Osterloh in Wolfsburg, near the company’s headquarters. Volkswagen signed a broader labor agreement in 2016 to eliminate 30,000 jobs worldwide, of which 23,000 corresponded to Germany, in order to generate around 3 billion euros in annual savings.

The Volkswagen car brand, which accounts for about half of the group’s global deliveries, employs approximately 110,000 workers in Germany versus a global workforce of 663,000 for the entire Volkswagen group, the world’s largest automaker. The business has focused on controlling large expenses to boost its profitability, which is lower than that of competitors such as PSA Group.

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