VW to pay €1,250 premium to workers despite its financial woes

Even though it is facing an ongoing crisis, German automaker Volkswagen announced on Thursday that it approved a one-time payment of €1,250 ($1,435) for workers covered by a collectively bargained contract.

The board approved the payment from the profit-sharing scheme even though the company and employee representatives had originally agreed to forgo it. The one-time payout will be made in May, it said.

"In a difficult period of restructuring marked by much uncertainty, our colleagues are working toward a successful future for Volkswagen with great expertise, passion and team spirit," said Volkswagen brand chief executive Thomas Schäfer.

The VW Group reported last week that its after-tax profit had collapsed by around 44% to €6.9 billion.

"The tremendous dedication of the entire workforce has contributed to the strong result of the Volkswagen brand — which in turn feeds into our group result," said Group Works Council Chair Daniela Cavallo. It was only logical and fair that all employee groups should now benefit, she said in a message to staff.

Sources close to the group works council indicated that the two sides had initially been far apart on the bonus amount. While the employee representatives had aimed for €1,500, the board had originally wanted to pay no more than €500. After several rounds of negotiations, Cavallo secured the €1,250.