Volkswagen Group (ETR: VOW) said on Sunday that it intends to slash its workforce in Germany by four thousand jobs. The company plans on offering its older employees early or partial retirement – a move that is expected to cost hundreds of millions of pounds.
Volkswagen shares jumped roughly 2.5% on market open on Monday. The stock now has a per-share price of £168 versus £127 at the start of 2021.
VW expects close to 900 workers to choose early retirement
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As per its agreement with the works council, Volkswagen said, it will offer early retirement to its workers born in 1956-1960. Those born up to 1964, the car manufacturer added, will be offered partial retirement. In October, the German automaker said it returned to profit in the third quarter.
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The German multinational expressed confidence that close to 900 of its workers are likely to choose early retirement. Another few thousand, according to Volkswagen, are expected to opt for partial retirement. VW, however, did not give precise figures on Sunday.
Sources also confirmed that the move will be implemented at six of VW’s plants located in Germany, which collectively have a headcount of roughly 120 thousand at the moment. An earlier report from Handelsblatt had suggested that the automaker will layoff up to a higher five thousand jobs instead.
The Wolfsburg-headquartered company also refrained from commenting on the cost associated with the job cut, which it said, depended on the number of employees who will accept the offer. One source, however, anticipated it at roughly £425 million.
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Volkswagen to increase its training budget by £34 million
Volkswagen is currently in the process of transitioning from a conventional carmaker to a technology company, much like Tesla. To that end, VW said it will increase its training budget to £171 million – an increase of close to £34 million.
The owner of a prominent luxury brand, Audi, further highlighted on Sunday that the hiring freeze that was previously strategised for the first quarter of 2021, will now remain in place until the end of the year. External hiring, as per Volkswagen, will only be possible for digitalisation, EVs, and battery cell development segments.
For the next two years, VW had recently set a target of cutting its procurement costs by 7% and overhead costs by 5%. At the time of writing, the German automaker is valued at about £94 billion and has a price to earnings ratio of 24.17.
