Volkswagen has Thousands of Employees Agreeing to Early Retirement

Volkswagen has Thousands of Employees Agreeing to Early Retirement

Nearly 9,300 Volkswagen employees have agreed to retire early as part of a cost cutting effort.

“We are rapidly approaching our target of 9,300 contracts signed. Employees who wish to take partial early retirement must make their decision by July 31,” said Karlheinz Blessing, VW board member for human resources.

Weak profitability and a big bill to foot in the wake of the dieselgate scandal are primarily to blame for these retirements. In all, VW has said it plans to use early retirements to cut as many as 30,000 jobs globally by 2025.

The total saved by the cuts will amount to nearly $4 billion, according to VW’s Transform 2025+ plan, which outlines the company’s post-scandal plans.

SEE ALSO: Demand for VW TDI Vehicles Strong Despite Diesel Scandal

The plan sees the labor force at VW shrinking by 5% and has been embraced by the labor union. If 30,000 employees agree to early retirement, VW says it will not need to layoff employees.

“This is a big step forward, maybe the biggest in the company’s history,” said VW brand chief Herbert Diess, in November 2016. “All manufacturers must rebuild themselves because of the imminent changes for the industry. We need to brace for the storm.”

Most of the employees retiring early work in Germany. Brazil and Argentina will be the next most impacted regions under this plan.

The offer is currently aimed at people born between 1955 and 1960.

A version of this story originally appeared on VW Vortex

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