VW Digitalization Adds 2,000 Jobs, Axes 4,000 But Not Compulsory Layoffs

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June 6, 2019

By Graeme Roberts

Volkswagen said it would be spending up to €4 billion on digitalization projects to the end of 2023 mainly in administration but also in production.

At least 2,000 new jobs will be created as a result, as agreed by the management board and general works council in their digital transformation roadmap.

VW said agile working methods, improved processes and digitalization would “reduce the burden on employees and speed up processes.” Jobs that used to be performed manually will be simplified through improved IT.

There’s a downside: “Consequently, up to 4,000 jobs in non-production units [across the VW Group] will not be re-staffed over the coming four years,” the automaker said.

“A precondition for this is that tasks are eliminated as a result of digitalization, process optimization and organizational streamlining.

“In addition, further investments in Industry 4.0 and an associated increase in productivity of 5% per year in production units through 2023 were also agreed.

“The budget for training is to be increased by a further €60 million to €160 million to take account of the human resources transformation under the digitalization offensive. A uniform employment guarantee for Volkswagen and Volkswagen Sachsen through 2029 has also been agreed.”

Ralf Brandstaetter, chief operating officer of the Volkswagen brand, said: “Our digital transformation roadmap adds further momentum to the modernization of Volkswagen. We are laying the sustainable foundation for making the company fit for the digital era. We are accumulating new digital expertise, and making all areas of our organization faster, leaner and more competitive. At the same time, we are creating new, modern digital and agile jobs and improving our productivity.

“If we have to eliminate jobs as a result of digitalization we are doing so along the demographic curve in the most socially responsible manner possible.”

The cost reductions accompanying the investments also help Volkswagen to finance the transformation from its own resources. The brand has set its sights on achieving an operating return on sales of 6% by 2022, three years earlier than originally planned.

Thomas Schmall, CEO of Volkswagen Group Components, said: “For our components plants, the digital transformation roadmap is the catalyst for our transformation to e-mobility. Going forward, we will be taking responsibility for battery cells and battery systems through electric drives to charging infrastructure and recycling for that we need process digitalization, greater software expertise and lean and agile steering of our worldwide component activities.”

Chairman of the General Works Council, Bernd Osterloh, said: “The employment guarantee through 2029 rules out compulsory layoffs for the next 10 years. That sends an important signal: digitalization brings change, but jobs at Volkswagen remain secure. As far as possible job cuts are concerned, it has to be clear that the tasks are genuinely redundant otherwise, every post that becomes vacant will be re-staffed because we will not accept increased workloads. Another important aspect for us was extending age group eligibility for partial retirement.”

Key elements of the digital transformation roadmap

  • Investments: Volkswagen will be spending up to €4 billion in digitalization projects through 2023 and beyond. These projects include IT products such as SAP 4/Hana, in particular for administrative applications, a purchasing system and new standard human resources applications.
  • New digital jobs: The automaker will be creating at least 2,000 new digitalization jobs in the group, brand and at components through 2023. These jobs, which are separate from the commitment to future-oriented jobs already set out in the pact for the future, will be created in all management board functions and will center on Wolfsburg where an additional 1,000 square meters of agile workplaces is to be set up.
  • Intensified training: €60 million will be added to the budget for training under the pact for the future through 2023. Consequently, €160 million will be available to safeguard training requirements as a result of the transformation. Training will be tailored to vocations and departments affected by the transformation. Volkswagen is also setting up an online university and sustainably strengthening learning via online platforms.
  • Strengthening vocational training: Vocational training will be oriented to future requirements. The AGEBI+ program for fully qualified vocational trainees who wish to combine practical experience with a degree program, as well as Faculty 73 are to become an integral part of vocational training at Volkswagen. Through 2023, they will account for up to 250 vocational training places per year out of the 1,400 under the collective agreement. Investment commitments amounting to €8.5 million between 2019 and 2021 have also been given for electric and IT labs as well as project workshops at Volkswagen’s six locations.
  • Employment guarantee: A uniform employment guarantee until 2029 has been agreed for Volkswagen and Volkswagen Sachsen. Compulsory layoffs during this period are therefore ruled out.
  • Lean and agile organization: Through 2023, up to 4,000 jobs in non-production units (Volkswagen Passenger Cars, including Volkswagen Components and Volkswagen Sachsen) in addition to the arrangements under the pact for the future will not be re-staffed if the tasks performed become redundant as a result of digitalization, process optimization and organizational streamlining. Working groups will formulate the concrete definition of these tasks by the end of August 2019. Workforce deployment across departments and locations is to be made more flexible to safeguard the necessary transformation.
  • Partial retirement: Partial retirement is to be made available for employees born between 1962 and 1964 in production and non-production units. Each of these three years will be released for partial retirement once the personnel, financial and productivity targets have been met. Outplacement options will be available for management staff.
  • Productivity targets: The company and the works council agree further productivity gains of 5% per year through 2023 are needed in production units to safeguard competitiveness.

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