Volkswagen Group, Toyota and General Motors each sell about 10 million vehicles annually around the world, yet VW has more global employees than Toyota and GM combined.
Clearly, the weak profitability at its VW brand stems from its low productivity. Yet because of the powerful role unions play at Volkswagen, that surplus of workers is unlikely to change anytime soon.
Not only are wide-ranging labor rights enshrined in Germany’s laws through the so-called “Co-Determination” principle of equal say in major corporate decisions, the strong role unions play at VW goes beyond that which is typical for a German company.
The influential trade union IG Metall has an organization rate above 90 percent, making it virtually impossible to run the company against the will of the 600,000 strong work force. More importantly, VW’s corporate statutes stipulate that no plant can be opened or closed – anywhere in the world – without the express consent of VW’s German workers whose representatives comprise half of its supervisory board. Major restructurings are near impossible.
The reason is rooted decades before the first Beetle left the assembly lines at VW's headquarters in Wolfsburg, Germany. Volkswagen has a unique relationship with organized labor as a result of its troubled past with the Nazi regime, which planned to build cars for Hitler’s Volk (people).
In a 2009 newspaper opinion piece, the then boss of IG Metall described why the carmaker could never become a “normal company." He equated VW’s own inherent culpability in Nazi crimes with that of Germany as a whole, a society that many in the country believe can never be “normal” again following the genocidal murders perpetrated during the Holocaust.
“The means to build the Volkswagen plant was procured from the funds of trade unions that were seized and expropriated by the Nazis in 1937,” he wrote. Only by granting wide-ranging rights to VW workers after the war did unions agree not to sue for ownership rights.
“Anyone who acquires shares in this company must be aware of this historic responsibility.”