Volkswagen Employees to Receive Full Bonus Despite Cost-Cutting Measures

Volkswagen (VW) has initiated a significant restructuring plan aimed at enhancing the company's future viability. Despite these efforts, employees will not experience any reductions in their annual bonuses for the current year, at least for now.

In late 2023, VW announced a comprehensive strategy to streamline operations, which largely went unnoticed by the public. By August of the following year, it became evident that these cost-cutting initiatives would not suffice to prepare the automaker for future challenges. After extensive negotiations with labor representatives and unions, VW's management reached a consensus on a collaborative approach in December 2024. Part of this strategy involves contributions from employees. Nevertheless, for this year, they are assured of receiving their full profit-sharing bonuses.

According to the labor council, while an agreement was made just before Christmas 2024 to temporarily suspend employee profit-sharing as part of the cost-cutting plan, this will only take effect in 2026. Therefore, this year's bonuses will be paid in full, as confirmed by labor council chair Daniela Cavallo during a company meeting in February.

The precise financial implications for individual employees remain unclear, but in previous years, bonuses have often reached several thousand euros per employee, contingent upon the company's profitability from the previous year. VW is scheduled to disclose its financial results on March 11, with the latest projections for an operating profit in 2024 being adjusted down multiple times to approximately 18 billion euros.

It's important to note that the employee bonuses are based not on the overall company performance but specifically on the results from the VW passenger cars and commercial vehicles divisions--not only from the previous year but also from the year before. The record earnings achieved in 2023 will again play a crucial role in determining this year's bonuses. Last year, the average bonus amounted to EUR4,735 per employee. Historically, bonuses have exceeded this amount in some years due to additional increments; however, that practice will cease in the current year.

Starting in 2026, employees can anticipate a significant reduction in their bonuses. The recently struck wage compromise stipulates that, for 2026 and 2027, only a fixed advance payment of around EUR2,000 will be made. This payment will arrive in November, while the variable portion, typically disbursed in May, will be suspended for two years. Subsequently, bonuses are expected to gradually return to previous levels by 2031.

In summary, while VW faces challenges with its cost-reduction strategy, employees will receive their full bonuses for the current year, with more significant changes expected in the coming years.