WORKING CONDITIONS

This section covers the sustainability topics of secure employment, adequate wages, social dialog, freedom of association and collective bargaining, training, and skills development, which are specified in ESRS 1.

Actions related to working conditions

The organizational units of the Volkswagen Group responsible for implementing actions relating to the working conditions focus area are Group HR Policy and Governance and Volkswagen AG’s Volkswagen Group Academy, which use human and financial resources on an ongoing basis to have a positive effect on the material impacts for employees and to contribute toward achievement of the targets set.

Budget planning round

What is known as the budget planning round (medium-term planning), in which Group-wide plant utilization is also planned, generally takes place annually as a key instrument of investment planning. The staffing situation of the individual sites is also taken into account.

The results of the medium-term planning are subject to approval by the Supervisory Board as regards the investment programs and investments included in it. Employee representatives on the Supervisory Board are also involved in the Supervisory Board’s decision on approval. Involving employee representatives is designed to help ensure that the goal of safeguarding jobs is achieved.

The budget planning round prevents business processes from having actual negative impacts on the working conditions of individual employees (e.g. job cuts) through workforce planning that stabilizes employment. The action is not tracked.

Due to the collective bargaining at Volkswagen AG that lasted until the end of 2024, it was not possible to complete this standard process in the reporting year.

Opinion survey

There is a direct opportunity in the Volkswagen Group for employees to speak up about their own and the Company’s interests, which has been used extensively in recent years, in the shape of the opinion survey. As part of the opinion survey, various aspects were highlighted in relation to an improvement in working conditions, including opportunities for employee development and qualification, a healthy work environment, participation opportunities and a good work-life balance. Within the organizational units employees had the opportunity to work with their line managers to develop actions in these areas on the basis of the survey results. Global measures were also derived in the last years from this employee survey in order to improve working conditions and participation opportunities. In the reporting year, the opinion survey was suspended for the purpose of revision.

Revising the opinion survey is intended to continuously strengthen dialog with employees. Furthermore, the interests of employees should be heard and taken into account in order to give the Group a well-founded pool of data for deriving effective actions on above-mentioned topics. Another employee survey is planned for 2025. Further information can be found in the chapter “Business conduct information” under “Corporate culture”.

The opinion survey is an important instrument for enabling mitigation of actual negative impacts of business processes. This is done by identifying, deriving, and taking actions relating to topics employees perceive as particularly critical.

The extent to which the tool is accepted by employees using employees’ rate of participation in the opinion survey will be tracked again in the future after its reintroduction. This can be used to assess whether the derivation of actions at critical points covers a broad base of employees and can accordingly be assessed to be effective.

Creation and expansion of digital training

The Volkswagen Group invests in training, which helps to enable employees to maintain long-term employability even when requirements change. In 2024, the focus was on creating and expanding a program of digital training to be able to provide more varied learning content for a larger number of employees. The Volkswagen Group is implementing and integrating the Success Factors tool and the learning platform Degreed as a learning ecosystem for digital learning and self-directed training. This creates a common framework for the qualification of all employees in the Volkswagen Group based on and controlled by the Volkswagen Group Academy. The global rollout is taking place in defined stages. The plan is to complete the rollout to the Group companies included in Success Factors by the end of 2028. On the learning platform Degreed’s “Volkswagen Group” subsection, for example, seven new companies were added in the reporting year, and user numbers increased by more than 25% from over 30,000 in 2023.

The Volkswagen Group’s efforts in the area of further training and qualification are also a response to the automotive industry’s far-reaching technological transformation in order to live up to rising societal expectations, international treaties, and political regulations that require targeted decarbonization of products and business processes. In this transformation process, the Company is also opening up new fields of business and business models for which the employees concerned are trained.

This action contributes to the actual and potential positive impacts on employees by providing secure jobs. This is achieved through the development and expansion of digital training courses to strengthen employee qualifications for the purpose of improving their employability.

The development and expansion of digital further training and the traditional training format offering are tracked through the strategic target of increasing average further training hours. Further information on this can be found under section “Targets related to working conditions”.

Actions related to freedom of association

The Volkswagen Group is committed to global compliance with freedom of association and recognizes the right of all employees to form trade unions and workers’ representation. Employees’ right to negative freedom of association is also respected. The recognition of the right of all employees to form trade unions and workers’ representation represents a key component of the Declaration on Social Rights.

The metrics collected in the reporting year for the first time on the coverage of employees by collective bargaining agreements of 92.0% (European Economic Area/EEA only) and on the rate of employees covered by a workers’ representative of 99.1% (European Economic Area/EEA only) show that the Volkswagen Group has created an environment that enables effective representation of interests. This effective representation of interests is the basis for the negotiation of fair and transparent pay by the collective bargaining parties. The negotiation process usually takes place within the framework of collective bargaining autonomy and is therefore governed by local regulatory conditions. Further information on the metrics can be found under “Metrics related to collective bargaining coverage and social dialog”.

Due to different political and legal conditions, it is not possible to implement the OECD and ILO standards at all Group’s production sites around the world to the same extent as in the European Union (EU). Freedom of association is realized in compliance with the laws applicable in the various countries and locations. The aim is to bridge the tension between the different national conditions and the interest in the greatest possible achievement of the right to organize. A particular challenge arises in states that have not signed the ILO Convention on Freedom of Association and Protection of the Right to Organize. In these efforts, care is taken not to violate local laws and not to put local employees at risk.

The Volkswagen Group maintains regular communication with and makes annual inquiries to, in particular, selected risk regions and risk markets in which it operates and in which a local legal right to freedom of association does not exist or is restricted.

Through this continuous measure, the Volkswagen Group contributes to the actual and potential positive impacts on employees in terms of comprehensive participation rights. In a restrictive environment, this takes place through regular communication with and inquiries to risk regions and risk markets.

Targets related to working conditions

Targets in the Human Resources business unit were developed deductively from the Group People Strategy, which was in turn developed in accordance with the Group sustainability strategy regenerate+ and the Group strategy.

The Group People Strategy and its targets were developed by the Group HR strategy department with the involvement of additional central organizational units of the Group HR divisions of Volkswagen AG and the HR strategy departments of selected Volkswagen Group brands. Employees and non-employees were not involved in the process for defining the targets. A new Group strategy was adopted in December 2024, as part of which the Group HR strategy was also adapted. The Human Resources business unit’s targets are analyzed at least once a year and discussed with the Board of Management and the brands’ board of management members responsible for HR at regular intervals. They are reviewed to determine whether the targets or actions for achieving the targets need to be adjusted.

With regard to tracking the undertaking’s performance against the achievement of these targets and identifying lessons or improvement opportunities arising as a result of the undertaking’s performance, no process for codetermination by employees or their representatives is planned.

Target related to training and skills development

The Volkswagen Group aims to promote employees’ employability. This is intended to facilitate secure employment in the long term. The Volkswagen Group therefore offers its employees extensive training opportunities.

Independently of the metrics required by the ESRS in this focus area, the Volkswagen Group has already had a strategic metric on training hours for several years.

In contrast to the definition of employees set out in the chapter introduction under “Material impacts and their interaction with strategy and business model”, the active workforce is used for the strategic KPI, but excluding employees in the withdrawal phase of the time asset bonds (time asset bond: time credit from deferred compensation). The active workforce covers all employees excluding vocational trainees and employees in the passive phase of their partial retirement. In addition, the Chinese joint ventures are not taken into account in the strategic KPI. The different calculation bases mean that the strategic KPI differs from the metric average number of training hours per employee in accordance with the ESRS, which is listed further below in the text.

The goal is to increase the average number of training hours per employee in the active workforce (here excluding employees in the withdrawal phase of their time asset bonds) in the Volkswagen Group by 35% to 30 hours per year by 2030. The baseline value is 22.3 hours and represents the average for the base years 2015 to 2019. These years were chosen as the baseline due to the Covid-19 pandemic, which temporarily curtailed training activities in 2020 and 2021.

The target for this strategic KPI for the reporting year was 26 hours. With an average of 20.8 hours per employee, the target has not been met. The decrease in the number of training hours is due to the prioritized implementation of efficiency programs in the Group, with the result that the departments did not focus on measures to increase the number of training hours. In the 2023 reporting year, 22.1 hours per employee were achieved.

This target was developed as part of the Group People Strategy and the associated Group strategy and was included in the Group sustainability strategy regenerate+ as a top KPI. Due to the momentum in this focus area and the varied training needs and regulatory requirements in the various local companies, no extended, Group-wide regulation of this focus area has been put in place beyond the strategic direction, with the exception of the Charter on Training with its scope of application. Since the target was set, no changes have been made to the target itself.

The strategic metric of the Group People Strategy covers the employees’ training hours, including the digital self-guided training hours that are time-independent. The annual average was calculated on the basis of the data from January 1 to December 31 until 2023. In the course of the transition to using the requirements of the ESRS, the calculation was adjusted to the effect that the annual average is now calculated on the basis of data from December 31 of the previous year to December 31 of the reporting year. As a result, the KPI will in the future correspond to the metric in this aspect.

By 2023, the strategic HR planning implementation status was reported as a KPI of the same name, which has helped to provide secure jobs. Strategic HR planning supplements operational HR planning by adding a qualitative, long-term and strategic planning perspective. It allows to identify qualitative and quantitative surpluses and shortfalls in parts of the Company at an early stage and derives necessary qualification, vocational training and restructuring requirements designed to help support the transformation. To map progress in strategic HR planning, we measure the percentage of the active workforce included in the strategic HR planning from 2023. The targets are being adjusted as part of the Group strategy revision, and reporting of the KPI has been suspended for 2024 due to the ongoing efficiency programs.

No other measurable outcome-oriented targets within the meaning of the ESRS requirements have been set in connection with adequate wages, social dialog, freedom of association, or collective bargaining. The effectiveness of the policies and actions in relation to the impacts identified through the materiality assessment performed this year for the first time is not monitored.