The Strategist

Volkswagen intends to retire up to 5,000 employees in Germany early

03/15/2021 - 02:52

German carmaker Volkswagen has developed a scheme that will help it cut costs significantly. According to Handelsblatt, the company intends to start transitioning its employees in Germany to part-time employment with early retirement.

Snappy Goat
Snappy Goat
This measure will first be applied to the plants of the title brand and then to other brands. In total, the concern expects to cut up to 5,000 jobs in this way.

The concern has no right to just cut jobs until 2029, so its only option is to try to persuade employees to take early retirement. 

The board of directors has decided to start offering employees born in 1964 to switch to part-time work and then retire before the government's retirement age (currently 65 for both women and men in Germany). The part-time employment programme can last up to six years. 

Thus, employees born in 1964, who may now be just 57 years old, will be able to retire at the age of 63. In doing so, the company will increase their pension payments. Volkswagen's management predicts that about 3,000 employees will take advantage of this option.

In addition, employees born in 1961 and 1962 will be offered by Volkswagen to stop working as early as this year. In return, they will be employed as part-time specialists with 75% of their salary for 2.5 years, after which they will be eligible for final retirement. Up to 1,000 more employees may take advantage of the offer, the group's management believes.

According to its sources, Volkswagen has allocated around €500 million for both programmes. At the same time, these measures could save the group billions of euros in the long term.