“The aim is to retain VW production sites, prevent compulsory redundancies and to shoulder the necessary investments for the future,” Heil said.
The labour minister plans to extend state money paid to struggling companies to help them retain staff to a maximum of two years, twice as long as previously.
“Our task as the state is to assist this solution with an active economic and industrial policy,” he said.
The Cabinet is to make a decision at its regular Wednesday meeting, he said.
VW is trying to negotiate a 10% pay cut in ongoing talks with the IG Metall trade union, along with cutting allowances and bonuses.
The company has threatened to close factories in Germany and slash tens of thousands of jobs.
Heil insisted the company was still viable but added that a solution based on partnership between management and the union was needed.
IG Metall head Christiane Benner said that it was “good that the government is acting now.”
She said that the proposed extension of state aid for reducing working hours to mitigate layoffs would increase job security and helps companies retain skilled workers, Benner added.
VW goes into a fifth and decisive round of pay talks with IG Metall in Hanover on Monday.
IG Metall has called for an agreement before Christmas.
