Volkswagen AG (OTCPK:VWAGY) made progress on the labor front on Wednesday by striking a a two-year wage deal for workers at its western German factories. The resolution puts Volkswagen ahead of some European auto sector peers, as well as other major employers in Germany.
The new labor deal will impact about 125K of the German automaker's employees. Volkswagen (OTCPK:VWAGY) will hike wages by about 8.5%, which is below the current inflation rate in Germany but higher than what other employers have offered as wage increases in recent weeks.
The Volkswagen pay increases will be phased in with workers receiving a 5.2% wage hike after June of 2023 and another 3.3% increase after May of 2024.
The IG Metall union had initially demanded an 8% wage increase over 12 months for the workers at six German Volkswagen plants.
Earlier in the month, Volkswagen placed plans for a $2B electric vehicle plant under review.
Shares of Volkswagen fell 2.44% in Frankfurt in early afternoon trading.