by Tarik Hamdan*

Reviewed by Matheus Lucas Hebling

Introduction

The current crisis at Volkswagen in Germany presents a valuable opportunity to compare how workers in Germany respond, in contrast to those in other countries, particularly Brazil, even when facing the same company. These differences can be attributed to significant institutional variations between nations. Despite Volkswagen confronting one of the most severe challenges in its history, the German model of labor-capital relations retains its distinctive characteristics.

Volkswagen currently operates 10 factories in Germany. Six of these are dedicated to automobile production, located in Wolfsburg, Dresden, Hannover, Osnabrück, and Emden. The remaining four are responsible for component manufacturing, situated in Chemnitz, Braunschweig, Salzgitter, and Kassel (Wermke, 2024b). In contrast, the company has four factories in Brazil, three of which are in the state of São Paulo—São Bernardo do Campo, Taubaté, and São Carlos—and one in Curitiba, located in São José dos Pinhais (Hamdan, 2023).

Labor Relations at Volkswagen in Germany

On September 2, Volkswagen in Germany announced plans to close two factories: one producing auto parts and another dedicated to automobile manufacturing. Additionally, the company decided to terminate a collective agreement that previously safeguarded German jobs from operational layoffs.

Several indicators highlight the significant economic challenges faced by Volkswagen in Germany. The profit margin dropped notably from 3.8% in the first half of last year to 2.3% this year. Despite a production capacity of approximately 14 million units last year, the company produced only 9 million (Sindicato dos Metalúrgicos do ABC, 2024).

According to the company’s CFO, vehicle sales plummeted dramatically, particularly after the COVID-19 pandemic (Wermke, 2024a). A major contributor to the crisis has been the decline in electric vehicle sales, driven by the rise of the Chinese automotive industry and the end of subsidies for electric vehicle purchases. Additionally, combustion engine sales have fallen (Wermke, 2024b). In the first half of 2024, Volkswagen’s main brand sold 1,518,756 vehicles, a 0.3% decrease compared to the previous year, with sales revenue declining by 1.8% to 42.2 billion euros.

Although Volkswagen’s actions may seem severe, the German model of capitalism—characterized by codetermination on the Supervisory Board and co-management at the facility level—helps prevent the escalation of conflict (Thelen, 1992). The Supervisory Board oversees the Management Board and appoints its members. Of the 20 seats on the Supervisory Board, half are allocated to workers, with three of these ten seats held by IG Metall representatives. This structure ensures that decisions related to plant closures and significant labor cuts face strong resistance from workers. Additionally, key decisions at Volkswagen require an 80% majority from the Supervisory Board, complicating the process. The State also holds significant shares and occupies two seats on the Supervisory Board, making factory closures less likely.

Although IG Metall has threatened strikes as a last resort, the likelihood of a prolonged strike or an escalation to garner international support remains low. The institutional framework grants workers substantial power, mitigating potential conflicts. While this does not imply that losses will be entirely avoided, it suggests that they will be limited and mitigated over time.

Labor Relations at Volkswagen in Brazil

In comparison to Volkswagen in Germany, Brazilian workers face significantly harsher conditions. The absence of the codetermination model at the corporate level—since the facilities in Brazil belong to a subsidiary—and the weakness of the local works council, which lacks a formal role in co-management, force Brazilian workers to adopt alternative resistance strategies, often at multiple scales.

For example, Volkswagen’s history in the ABC region shows that, since the 1980s, trade unions have frequently resorted to strikes. Between 1980 and 1989, seven strikes occurred, followed by three strikes from 1990 to 1999, six strikes between 2000 and 2009, and only one since 2010. In contrast to Germany, where the low number of strikes reflects institutional power vested in the works council and Supervisory Board, the decline in strikes in Brazil is mainly due to economic crises and reduced structural and associational power among workers.

 

Graph 1: Number of strikes at Volkswagen in São Bernardo do Campo (1980–2024) Source: the author, based on Hemeroteca Digital

A similarly confrontational approach is seen at Volkswagen’s São José dos Pinhais facility. Despite Volkswagen’s operations there beginning in 1998, confrontations have been frequent. From 1998 to 2011, the factory experienced strikes almost every year. The most significant strikes occurred in 2009 and 2011, shutting down the plant for 21 and 39 days, respectively (Hamdan, 2023).

Brazilian workers have also utilized transnational strategies to confront challenges, an approach not commonly observed in Germany. The most significant of these is the Global Works Council (GWC), which brings together representatives from Volkswagen’s works councils worldwide. Brazilian workers have leveraged the GWC to secure investments in new products amid threats of plant closures or job reductions. This occurred in 2003, when Volkswagen threatened to shut down the São Bernardo do Campo plant, and workers successfully attracted the production of a new car model, the Tupi (Hamdan & Walmrath, 2024).

Conclusion

Although German workers are currently facing significant threats due to the company’s actions, the German model of conflict resolution—rooted in institutional mechanisms within the corporation and at the facility level—remains intact, even if the conflict results in a strike led by IG Metall. Ultimately, labor relations at Volkswagen in Germany tend to exhibit low levels of conflict and are largely localized. In contrast, labor relations at Volkswagen in Brazil are markedly more confrontational, requiring the use of transnational strategies such as the Global Works Council. These differences reflect the distinct institutional frameworks embedded in each country.

Bibliography

* Tarik Hamdan is a PhD candidate in Sociology at the Federal University of Rio de Janeiro (UFRJ), enrolled in the Sociology and Anthropology Graduate Program (PPGSA). His primary research interests lie in the sociology of work and economic sociology. Currently, he is examining various trade union strategies by comparing the automotive industry in Germany and Brazil, focusing on Volkswagen.

Tarik Hamdan (2024) "Contrasting Labor Relations at Volkswagen: A Comparative Analysis of Germany and Brazil". Brazilian Research and Studies Blog. ISSN 2701-4924. ISSN 2701-4924nameVol. 3 Num. 1. available at: https://bras-center.com/contrasting-labor-relations-at-volkswagen-a-comparative-analysis-of-germany-and-brazil/, accessed on: November 20, 2024.