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Thursday, October 13, 2016

Dieselgate Repercussions:VW Won't Fire Anyone, Might Drop 25,000 Jobs In The Next Decade

Volkswagen's strategy to cut down on expenses and revive themselves following the cheating emissions scandal could see the German brand drop roughly 25,000 jobs over the next decade, as workers retire.

The automaker sees this solution more cost-effective than actual layoffs, according to AutomotiveNewsEurope, citing the brand's labor chief, Bernd Osterloh, who recently spoke to Handelsblatt on the matter.

"We have the huge benefit of the baby boomer age groups. That's why we can also say the jobs of VW workers are safe", the exec said.

Osterloh's target of 25,000 hasn’t been officially confirmed by Volkswagen, but the company does have tens of thousands of staff born in the 1950s and 1960s, who will retire in the coming years. This move is seen by analysts as a solid start after Dieselgate, but the experts also believe that the carmaker needs to reduce its purchasing costs and R&D spending.

"VW has no choice but to bring down costs massively if it wants to put its business on a sound footing. VW must achieve cost savings of about 22 billion euros ($24.64 billion) globally in coming years, three quarters of which must be invested in its transformation", said Arndt Ellinghorst, Evercore ISI analyst.

Moving workers into early retirement could help VW save another €2.5 billion ($2.75 billion), according to Ellinghorst, but the company's management is also looking into trimming white-collar staff, which currently accounts for roughly two thirds of the 60,000 jobs at Wolfsburg, in domains such as Research and Development, Sales and Marketing and Administration.


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