A significant labor action is set to unfold on Monday as tens of thousands of Volkswagen employees are expected to engage in strikes across various plants in Germany, according to the labor union IG Metall. This marks the most extensive work stoppages at the automaker's German operations since 2018. The strikes, anticipated to last for several hours, come on the heels of weeks of collective bargaining discussions where Volkswagen did not dismiss the possibility of widespread layoffs and potential plant closures within its domestic market. The company has indicated that such drastic measures are essential to bolster its financial position in the face of rising competition from China and a decline in European demand.

The so-called "peace obligation," an agreement between workers and Volkswagen that prohibited industrial action, expired on Saturday, paving the way for strikes to commence from Sunday at almost all of Volkswagen's German facilities. "If necessary, this could turn into the most challenging wage dispute in Volkswagen's history," warned Thorsten Groeger, chief negotiator for IG Metall, in a statement on Sunday. "The duration and intensity of this conflict are now in Volkswagen's hands at the negotiating table." Groeger further stated, "Volkswagen has ignited our collective bargaining agreements, and instead of putting out this fire during three rounds of negotiations, the management continues to pour open barrels of gasoline onto it."

The strikes are the first large-scale labor actions Volkswagen has faced since 2018, when 50,000 workers halted production at plants over wage disputes. Although the current work stoppages are expected to be brief, there is a possibility that 24-hour warning strikes could be initiated later this year. Indefinite strikes remain a last-resort option, to be considered only after further consultation with members, according to IG Metall.

This labor unrest presents a new challenge for Europe's largest car manufacturer, which has seen its operating profit for the first nine months of the year drop by a fifth compared to the previous year, as its flagship brand struggles. Vehicle sales have also declined, particularly in China, where Volkswagen is losing market share to domestic electric vehicle manufacturers.

A Volkswagen spokesperson acknowledged the impending strikes, stating in a release that the company had taken preemptive measures to mitigate the impact of the strikes on its factories and customers. The spokesperson also noted, "Volkswagen respects the employees' right to participate in a warning strike," and emphasized the company's commitment to "constructive dialogue" to reach a resolution.

Volkswagen has hinted that it may need to close plants in Germany for the first time in its 87-year history. In October, the company suggested that employee pay would need to be reduced by 10% to enhance cost competitiveness and secure the company's future. IG Metall countered last month, stating that workers would be willing to forgo pay increases totaling €1.5 billion ($1.6 billion) if the company's executives pledge not to close any factories and agree to forgo a portion of their bonuses.

The fourth round of negotiations is scheduled for December 9, and it remains to be seen how this labor dispute will be resolved. The outcome could have significant implications for Volkswagen's operations and the broader automotive industry in Germany.