Union threatens to cripple Volkswagen vehicle production in pay dispute

Besides 6 percent pay demand, the union is also pushing for improvements in VW's corporate pension scheme

German union IG Metall threatened on Thursday to cripple vehicle production at Volkswagen if top executives at Europe's biggest carmaker continue to block sizeable pay increases for German staff.

IG Metall is incensed about an offer proposed by Volkswagen's (VW) management on Tuesday which the union said would raise pay for 120,000 staff at western German plants by no more than 2.2 percent over 12 months, about a third of the 6 percent it is seeking.

After three rounds of fruitless bargaining, more than 20,000 workers at VW's main Wolfsburg factory on Thursday walked off their shifts for two hours, staging the first warning strikes at VW since 2004, IG Metall said, adding thousands more staff at five other German VW plants joined in the protests.

"If necessary we will bring half the VW group to a standstill," works council chief Bernd Osterloh said at a rally at the Wolfsburg plant, referring to the global carmaker's German operations.

"We will not hesitate to plan further warning strikes," Osterloh said. "And those would hit the car-making plants just as much as the component sites which deliver engines, transmissions and parts to the entire group."

Besides the 6 percent pay demand, IG Metall is also pushing for improvements in VW's corporate pension scheme and more hiring of apprentices to help cope with an industry shift to electric vehicles and self-driving technology.

But VW, facing billions of euros in costs and fines over its diesel emissions-test cheating scandal and huge investments for its subsequent transformation plan, has dismissed the demands and called for a wage agreement with a "sense of proportion".

The carmaker does not expect the disruptions on Thursday to impact delivery commitments, a VW spokesman said, without elaborating.

The in-house pay dispute at VW coincides with IG Metall's efforts across Germany to push for a 6-percent wage increase for about 3.9 million workers in the country's metal and engineering industry.

Thousands of workers on Thursday began a second day of 24-hour strikes also affecting Daimler and VW's Porsche brand.