Key Takeaways
- Volkswagen and IG Metall are entering a new 2026 collective bargaining round, with the union demanding a 5% pay increase.
- Volkswagen's new remuneration and grading system is scheduled to take effect on January 1, 2027.
- The 2024 Zukunft Volkswagen agreement established major labour-cost reductions, a 35-hour week and changes to bonuses and apprenticeship numbers.
IG Metall Opens 2026 Wage Negotiations
IG Metall has set a demand for a 5% pay increase for Volkswagen employees over a 12-month period. The union also wants a social component in the agreement, particularly benefiting employees in lower pay groups.
The collective bargaining moratorium is scheduled to end on January 1, 2027, creating a significant deadline for negotiations between Volkswagen and employee representatives.
Volkswagen's German operations are covered by a company-level collective agreement that applies to around 100,000 employees across its major German locations. The agreement also covers Volkswagen's three Saxony sites following their integration into the company's collective bargaining framework in 2026.
New Remuneration System Starts in 2027
A central issue is Volkswagen's planned new remuneration and grading system. The company and IG Metall agreed during the previous bargaining round to introduce the system from January 1, 2027.
Volkswagen says the new framework is designed to create a more transparent and modern system for evaluating jobs and assigning employees to pay groups. The company previously said the existing structure included around 6,000 different work systems and 167 job descriptions.
Volkswagen also said the new system is intended to reduce collectively agreed total remuneration by 6%. The transition phase began during 2026, with employee classification moving toward the new structure.
What the 2024 Agreement Changed
The December 2024 Zukunft Volkswagen agreement established a broad package of labour and production measures. Volkswagen said it created conditions for approximately €1.5 billion in annual labour-cost relief at the collectively agreed level.
The agreement also standardized a 35-hour working week for tariff employees from July 2025. Wage increases for 2025 and 2026 were suspended, while bonuses and other payments were adjusted over subsequent years.
Volkswagen also reduced apprenticeship positions at its German plants from 1,400 to 600.
The agreement included plans for a socially responsible workforce reduction of more than 35,000 employees in Germany by 2030, alongside changes to production capacity and investment plans.
Labour Costs Remain a Central Issue
Volkswagen has repeatedly linked changes to its German employment framework with the need to improve competitiveness and manage costs. The company previously argued that high costs and intense competition in the European automotive industry required changes to collective working conditions.
At the same time, IG Metall has maintained its position that employees have already made significant contributions through previous agreements and should receive an appropriate share of future gains.
The competing positions make the upcoming negotiations important for both Volkswagen's cost structure and its German workforce.
TwikUp's Perspective
Volkswagen's labour strategy is moving from the emergency cost measures agreed in 2024 toward a longer-term restructuring of how employees are classified and compensated.
The 2027 remuneration system is particularly significant because it could establish the framework under which pay progression and job evaluation operate for years ahead. The outcome of the 2026 bargaining round will therefore matter beyond a single wage increase.
For Volkswagen, the challenge is balancing cost competitiveness with workforce stability during a major transformation of its German manufacturing operations.
What Happens Next
The next stage will depend on negotiations between Volkswagen and IG Metall as the 2026 bargaining round progresses. The new remuneration system remains scheduled to become binding on January 1, 2027.
Any further changes to wages, collective agreements or employment conditions will depend on the outcome of negotiations between the company and employee representatives.