Tesla Denies Link Between Wage Increases And Unionization Efforts In Germany

Tesla Inc. (NASDAQ:TSLA) has denied that it is raising salaries for its factory workers in Germany in response to an ongoing unionization effort, a move that precedes potential similar actions in the U.S.

Tesla’s management in Germany announced a package of wage increases for workers last week during CEO Elon Musk’s visit to the Berlin Gigafactory, reported The Wall Street Journal. Musk also assured that the facility would manufacture its next-generation vehicle.

“Claims that there is a connection between Tesla’s salary adjustments and union activity are without any truth,” Tesla Germany noted, as per a report on Teslarati.

The company has been facing pressure from Germany’s influential IG Metall union, according to the Journal, which seeks to unionize the plant and have Tesla agree to a union contract.

Concurrently, a smaller industrial union representing Tesla service workers in Sweden has gone on strike and is scheduled to meet with the company on Monday to negotiate a collective bargaining contract.

These developments occur as the United Auto Workers union in the U.S. sets its sights on Tesla’s factories, hoping to attract nonunionized workers to its ranks. Unionizing Tesla’s workforce in the US and Europe could significantly increase the company’s labor costs, already under pressure due to price cuts in response to slowing growth.

During his visit, Musk and Tesla executives informed workers that the company would increase wages by 4% effective in November for the approximately 11,000 employees at the German plant. Additionally, Tesla will pay a 1,500 euro ($1610.24) bonus in December to offset inflation and will increase annual wages by an extra 2,500 euros ($2683.73) for production workers starting in February.

Tesla had previously announced its intention to raise wages at an internal company event in October, a move that follows a 6% wage increase after the plant’s opening last year. The Berlin Gigafactory, which currently produces about 5,000 cars a week, has been the focus of increasing tensions between Tesla and IG Metall, Germany’s largest labor union.

As the only major carmaker in Europe without union representation on the shop floor, Tesla’s interactions with labor unions will continue to be closely watched.