Automotive manufacturer Daimler announced this week that it has reached a deal with German unions to reduce the hours of its non-factory employees, in a move to save jobs that would otherwise be cut. According to the official statement, Germany-based employees in administrative and other non-manufacturing functions will work two hours less a week and take corresponding reductions to their pay for one year from October 1. They will also forego their profit-sharing bonus for 2020.
While the carmaker did not state how many employees will be affected or the amount of savings expected to be derived, Daimler employs approximately 174,000 workers in Germany. Wilfried Porth, Director of HR and Labor Relations at Daimler AG, said: "We want to thank the workforce for their important, temporary contribution to overcoming this crisis together."
Daimler CEO Ola Kallenius had warned earlier in the month that salary cuts were underway, saying that it would be necessary to safeguard the company's investments in future technologies—specifically electric cars. Automakers have been put under significant pressure by European Union regulations on carbon emissions, and Daimler has been undergoing a prolonged cost reduction exercise since last year in an attempt to make the transition to electric cars.
In late 2019, Daimler had already announced plans to cut at least 10,000 jobs worldwide by 2022, including 10 percent of management positions. Since then, the COVID-19 crisis has led some reports to estimate the number of cuts might double to 20,000, especially after the carmaker posted massive losses last quarter.
Image credit: Hoffman construction.