Labor Cooperation on VW Cost-Cutting Plan Breaks Down

Efforts by Volkswagen AG and unions to reduce labor costs were suspended earlier today, as labor leaders claim the company is pushing for greater cuts than the two sides agreed to in November.

The fragile agreement aims to reduce the VW brand workforce in Germany by some 30,000 people by 2025, mainly through attrition. The effort targets an annual saving of €3.7 billion ($4 billion) by 2020.

But management, pointing to reduced demand for some of its models, has clashed with labor over its attempt to reduce the number of temporary workers it needs, Reuters reports.

Reuters says labor last week stopped cooperating with the company on such matters as apprenticeships, efficiency gains and overtime work. The dispute intensifies a running battle between Bernd Osterloh, who heads VW’s works council, and VW brand chief Herbert Diess (pictured), who built a reputation as a cost-cutter at BMW AG.

Osterloh is urging VW Group CEO Matthias Mueller to take a more active role in resolving the disputes. Mueller told staff earlier today he will personally “do everything” to resolve conflicts.