# Volkswagen strikes below-inflation wage deal, continues German trend
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-11-23
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Volkswagen Agrees 8.5% Wage Increase Deal for Workers in
Meta Description: Volkswagen strikes a two-year wage deal for workers, offering 8.5% pay increase, amid inflation concerns and demands for higher pay across the industry.
URL: https://financedigest.com/volkswagen-strikes-below-inflation-wage-deal-continues-german-trendhtml

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By Jan Schwartz

HAMBURG (Reuters) -Volkswagen on Wednesday agreed a two-year wage deal for workers at its western German factories, offering around 8.5% more pay, which was below inflation but above what other employers have yielded in recent weeks.

The deal, affecting around 125,000 of the carmaker’s employees, would have been considered exceptionally generous until recently but is now below inflation, which was 11.6% last month in Germany, Europe’s largest economy.

Workers will receive a 5.2% wage hike from June 2023 and another 3.3% from May 2024, as well as a lump-sum payment worth 3,000 euros ($3,093) after tax to help offset [soaring inflation](https://www.financedigest.com/stocks-tumble-dollar-rallies-as-soaring-u-s-inflation-implies-an-aggressive-fed.html "Stocks tumble, dollar rallies as soaring U.S. inflation implies an aggressive Fed").

Unions across [Germany and Europe are demanding higher pay](https://www.financedigest.com/in-inflation-hit-germany-massive-strike-over-pay-to-cripple-transport.html "In inflation-hit Germany, massive strike over pay to cripple transport") to give workers relief from record inflation, but employers are resisting, citing rising material and energy costs.

In Italy, unions representing workers at automakers including Stellantis and Iveco requested an 8.4% [pay rise](https://www.financedigest.com/unicredit-shareholders-urged-to-reject-ceo-orcels-pay-rise.html "UniCredit shareholders urged to reject CEO Orcel’s pay rise"), which the companies described as “heavy.

Daimler Truck said earlier this month [unions were asking for an 8% increase](https://www.financedigest.com/ita-airways-averts-strike-after-wage-increase-accord-with-unions.html "ITA Airways averts strike after wage increase accord with unions") but that others in the industry were offering 6-6.5%, and that it would offer somewhere in between.

Holger Schmieding, chief economist at Berenberg Bank, saw the Volkswagen deal as “overall a bit high” but saw no [risk of a “wage price](https://www.financedigest.com/german-residential-property-market-faces-risk-of-price-drop-diw-study.html "German residential property market faces risk of price drop – DIW study") spiral – it’s more of a hump,” he said.

The deal agreed by the carmaker and metalworking union IG Metall is similar to an agreement struck last week for the wider metal engineering industry, which set the benchmark for 3.9 [million metal and electrical](https://www.financedigest.com/stellantis-to-invest-130-million-euros-in-german-plant-for-new-opel-electric-car.html "Stellantis to invest 130 million euros in German plant for new Opel electric car") sector workers nationwide.

In combination with political relief measures such as the electricity and gas price brakes as well as further one-off payments from the state, the result is an overall package that curbs the [impact of inflation,”](https://www.financedigest.com/russia-could-hike-rates-in-2023-if-inflation-risks-have-big-impact-cenbank.html "Russia could hike rates in 2023 if inflation risks have big impact -cenbank") IG Metall negotiator Thorsten Groeger said in a statement.

IG Metall, which is Germany’s largest trade union, had initially demanded an 8% [wage increase](https://www.financedigest.com/greece-to-increase-minimum-wage-again-before-election.html "Greece to increase minimum wage again, before election") over 12 months for the workers at six German VW plants as well as at subsidiaries including Financial Services.

($1 = 0.9697 euros)

(Reporting by Jan Schwartz, Victoria Waldersee, Rene Wagner; Writing by Ludwig Burger and Maria Sheahan; editing by Jason Neely, Tomasz Janowski and Toby Chopra)


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