Union reports that Volkswagen is considering layoffs and 10% pay cuts as part of plans to shut down German plants.

The company's works council announced Monday that Volkswagen is considering implementing pay cuts, layoffs, and plant closures or reductions in Germany.

Daniela Cavallo, head of the works council, revealed that the Volkswagen management presented plans to the council that include a 10% reduction in pay across the board, as well as wage freezes in 2025 and 2026. The body estimates workers will suffer pay cuts of around 18% over the period.

The works council, comprised of elected staff members representing the company's workforce, stated that workers with specific collective wage agreements would no longer receive bonuses and additional payments on employment anniversaries.

Cavallo stated that Volkswagen plans to close three factories and reduce the size of all other plants in Germany.

"This implies removing even more products, volumes, shifts, and assembly lines beyond what we have already accomplished," Cavallo stated in a Monday release. "All German VW plants are affected by this. None of them are safe," she added.

Car manufacturer has plans to cut thousands of jobs, as warned by her.

The council added that Volkswagen intended to outsource certain departments to either external firms or its foreign branches.

Volkswagen woes

The Volkswagen management presented its plans to the works council, separate from ongoing discussions about labor agreements. The next round of these talks is set to take place on Wednesday this week, when Volkswagen is also due to release its latest quarterly earnings.

According to a CNBC-translated statement released Monday, Volkswagen stated that the overhaul is necessary due to economic conditions.

Gunnar Kilian, Volkswagen's human resources chief, stated that the company would not be able to make additional investments unless it took significant steps to regain competitiveness. He added that restructuring would ensure the company's financial stability in the future.

Shares in Volkswagen were last down 0.87% at 11:35 a.m. London time

In September, the automaker had announced that it was considering plant closures and would be terminating various labor agreements. These agreements affected employees in specialist or leadership positions, temporary workers, and apprentices.

The company announced that it would terminate its employment protection agreement with its German workforce, which has been in effect since 1994.

The resistance to the announcements from the works council and IG-Metall has been strong.

This is a developing story and will be updated.