Volkswagen (VW), Europe's largest carmaker, is facing significant backlash due to plans to cut wages, lay off workers, and close factories in Germany for the first time. On December 5, 2024, the IG Metall union announced a four-hour strike at nine sites across the country, coinciding with the fourth round of negotiations between VW and labor representatives. Thousands of VW employees are expected to rally in Wolfsburg, the company's headquarters.
The planned strike duration is double that of a previous work stoppage involving nearly 100,000 factory workers. Despite ongoing discussions, tensions remain high, with CEO Oliver Blume defending the company's measures as necessary amid a rapidly changing environment. IG Metall negotiator Thorsten Gröger criticized Blume's remarks, indicating that employee layoffs contradict the company's festive messaging.
Meanwhile, Germany's economic outlook appears bleak as the Federal Statistical Office reported a 3.7% decline in industrial orders for November, largely attributed to a lack of large orders. Economists predict that many companies may reduce production in the coming months, contributing to a slight contraction in the German economy during the winter semester.
Despite these economic challenges, the German stock index (DAX) reached a new record on December 4, surpassing its previous high from July. Analysts suggest that this surge may be influenced by year-end trading behaviors and changing investor expectations regarding central bank interest rate policies. While the European Central Bank has raised rates significantly over the past year and a half to combat inflation, some observers speculate that the peak may have been reached, potentially leading to interest rate cuts next year.
The interplay between inflation control measures and economic performance remains critical, as high interest rates have historically pressured stock markets. Investors are cautiously optimistic, anticipating a potential shift in monetary policy, although the situation remains uncertain.