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Volkswagen restructuring: EU powerless?

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Published 22 November 2006
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Competitiveness Employment social protection
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Two commissioners have promised financial support for the 4,000 workers to be laid off at the Vorst (Brussels) car manufacturing plant, while Belgian politicians hit out at the "national considerations" behind Volkswagen's restructuring decision.

Social Affairs Commissioner Vladimir Spidla and Regional Policy Commissioner Danuta Hübner highlighted the "importance of supporting workers in transition, helping them with active labour-market policies to get another job, and to keep the period without a job as short as possible". They promised help from the European Social Fund, stating that Belgium already received €1.1 billion over the past six years. Commissioner Hübner intends to meet with the relevant regional authorities to discuss how to use the European structural funds to address the consequences of the Volkswagen decision. She also said that the European Investment Bank might play a part in this process.

The Volkswagen workers will not qualify for payment from the new Globalisation Adjustment Fund, as jobs are not moved to a country outside of the EU (for more on this Fund, see EurActiv 1 March 2006).

Volkswagen’s restructuring is the result of increasing competitiveness challenges for European carmakers. The European market (as well as the American) is struggling with overcapacity and the bigger growth markets are in Russia, India and China. The restructuring process is also controversial in Germany, as legal proceedings are beginning against a number of Volkswagen managers accused of having maintained a system of 'slush funds'. Parts of these funds were used for allegedly bribing shop stewards into accepting earlier restructuring measures, including the working-time cuts that are now being withdrawn.  

The restructuring was a model for nationwide labour-market reforms, which were inspired by former Volkswagen HR chief Peter Hartz, later a close aide of former German chancellor Gerhard Schröder. The new German labour market model has therefore become known as the 'Hartz reform'. The indictment, for bribery and breaches of the law on European works councils, concerns Hartz also.

To counter the globalisation challenges for European carmakers, the European Commission established a 'Cars 21' expert group which is supposed to produce a "competitive automotive regulatory system for the 21st century". 

Positions: 

Belgian Prime Minister Guy Verhofstadt said he was "shocked" that "national interests" were the reason behind Volkswagen's decision to move its production back to Germany. 

Belgian trade union leaders expressed their frustration with the "lack of solidarity" from their German counterparts, who had made a deal with Volkswagen's management to secure their work places as part of the German restructuring deal. 

The FTGB/ABVV trade union declared: "Effectively, and contrary to what we were led to believe during the past few days, company information does not allow for a VW Forest future. Over recent years, workers have agreed to make big efforts in terms of more and more flexibility, in order to avoid a cataclysm." The FTGB/ABVV expressed surprise that those efforts made should be in vain. It also observed that all measures taken by public administrations in the interst of employers (such as reductions in charges) were to no avail.

Reinhard Jung, president of the administrative council of the Brussels Volkswagen plant, said: "Volkswagen will maintain its Brussels production site. We are trying to find a constructive solution. We are aware of our social role in Brussels and we will try to find a solution that is socially acceptable for workers." He added: "The Belgian government has been informed." 

Charles Picqué, prime minister of the Brussels region, said that the was "shocked by the measure of restructuring," adding that "this decision is a slap in the face of efforts by the authorities to allow for extending activities in the Forest plant".

Next steps: 
  • EurActiv invites its readers to react to this story. Do you think the EU should/could do more? How can it reconcile European carmakers' competitiveness needs with the social protection of workers? Send us your  Letters To The Editor.
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Background: 

German car manufacturer Volkswagen is conducting a major restructuring of its operation as a result of globalisation pressures and overcapacity. After having cut around 20,000 jobs in Germany, it became clear on Tuesday 22 November that it will also halt its production of the Golf model in its Vorst-Brussels operation. Around 4,000 workers could lose their job.

In Belgium the news came as a shock for politicians who spoke of a "national catastrophe", comparing the news to the 1997 closure of French carmaker Renault’s Vilvoorde plant, which saw 3,000 job losses. 

Several Belgian politicians reacted with disappointment to the news, saying that their government had given generous aid to the German carmaker in the past. Volkswagen workers burned German flags to express their anger and frustration. The fact that the production of the Golf will be moved from Vorst to two plants in Germany (Mosel and Wolfsburg), where wage costs are higher than in the Belgian plant, caused Belgian politicians to talk about "nationalistic motivations" behind the German decision. 

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