Business & Economy News Slovakia

Volkswagen announces job cuts in Slovakia for first time in decade

Bratislava, Slovakia – In a statement released on Monday, Volkswagen announced it planned to reduce staff this year in Slovakia. These job cuts would be the first downsizing since the 2009 economic downturn.

Employing approximately 14.000 people, Volkswagen is the biggest car manufacturer and largest private sector employer in Slovakia.

The company said it will return roughly 500 workers it had borrowed from its Hungarian Audi plant. It added that it won’t extend expiring fixed-term contracts and will reduce the number of its contractors as part of a larger productivity drive which aims to increase efficiencies by 30% by 2025. The overall output projections remain the same, however, as the reduced staff will be compensated by increased technical capacity of the plant’s production lines, management said in the statement.

Volkswagen has been struggling to shift its strategy and priorities to electric cars and self-driving vehicles after the 2015 rigged emission tests scandal – a strategy that might threaten Slovakia’s economic development model.

Slovakia’s economy heavily depends on its auto industry, the bedrock and pillar of its export-driven manufacturing sector which accounts for 13% of its gross domestic product and for more than a third of total exports. With over 1 million vehicles manufactured last year, Slovakia is the country that produces the most cars per capita in the world – and figures are expected to rise to 1.15 million vehicles this year. Volkswagen alone manufactured more than 400.000 cars in Bratislava in 2018.

As Reuters points out, “a focus on traditional petrol and diesel cars and a low share of research and development activities could threaten Slovakia’s business model in coming years, as the EU aims to reduce carbon emissions from vehicles”.

According to many studies, Slovakia is also the most vulnerable country in Europe to automation and robotization: according to the OECD, 40% of jobs in Western Slovakia – where all the car-makers have production plants – are at risk of being automated in the near future, the highest rate in the world. The country’s auto industry accounts for most of the growth in industrial robots acquired in Slovakia in the last few years.

The country’s four car plants might face further downsizing and additional job cuts in the future as foreign car-makers shift to more productive and automated production lines and focus on the production of low-emission vehicles. Kia also announced it would reduce staff in February at its factory outside Zilina, for the first time since it launched in the country in 2006. PSA and Jaguar Land Rover – that kicked off production in Nitra last year – meanwhile stated they planned to increase production output this year.

Volkswagen is also facing mounting pressure over the wage gap between the workers of its Central European plants. In 2017, Volkswagen Slovakia saw its first-ever strike which resulted in an important pay raise.

Last Thursday, the Hungarian workers of VW’s Audi plant started a week-long strike to demand higher wages and protest against their being paid 20% to 40% less than their coworkers in Slovakia, Poland and the Czech Republic. “If the strike continues much longer, the production of some car brands at Volkswagen Bratislava could be halted completely”, local Sme daily wrote. And finally, workers at VW’s Czech iconic Skoda brand also threatened to go on strike pending the results of the collective negotiations over wage hikes.

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