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STORY: Volkswagen has scrapped decades-old jobs guarantees - setting the stage for possible layoffs, and a bitter battle with unions.

The move covers six plants in Germany, where jobs had been protected until 2029.

It comes after the car giant warned it could shut factories in the country for the first time in its 87-year history.

That news sent shockwaves through Germany’s vast auto sector, and prompted concern at the highest levels of government.

But VW says it has to act amid mounting competition from Asian rivals with lower costs.

The company also faces huge costs making the transition to new-technology vehicles.

And it’s operating amid a difficult economic climate, with growth uncertain and energy prices high.

However, the head of the VW works council has promised fierce resistance to any cuts.

Unions have also proposed a shift to four-day weeks instead of job losses - replicating an earlier cost-cutting drive from the 1990s.

If the two sides cannot agree by next June, then labor agreements in place prior to 1994 would come into force.

Unions say that would actually result in pay rises and other benefits - but would also permit redundancies.

The works council called for a negotiated settlement, saying VW would otherwise press ahead with layoffs as soon as next summer, while facing higher costs for those staff that remain.

It also called for an early start to this year’s pay negotiations, ahead of possible strikes penciled in for late November.