Volkswagen: First UK emissions rigged car sold in 2008IBTimes UK

Volkswagen has unveiled plans to introduce a 4.8% pay rise to its staff, even though earlier this year the embattled car manufacturer announced a series of drastic cutbacks. The German car giant, which reported a €3.48bn (£2.5bn, $3.8bn) loss as a result of the emission scandal as it was found around 11 million cars had been impacted worldwide, said workers will receive a 2.8% increase from 1 September, followed by an extra 2% from August next year.

VW, which has set aside £12.7bn to cover the costs related to the emissions-manipulation scandal, declined to confirm whether the deal will affect only employees working at its German sites or whether it will be extended to all of its staff.

News of the pay rise is somewhat surprising given that, earlier this year, VW's chief executive Matthias Mueller warned the company would implement "massive cutbacks" in a bid to shore up its balance sheet.

The pay increase is also at odds with annual wage growth in Germany, which currently stands at 2.5%, and with -0.2% inflation recorded in both Germany and the Eurozone.

Earlier this year Mueller also confirmed that his predecessor, Martin Winterkorn, who left the company over the emissions issue, received £13m in total awards for 2015, while senior executives had their bonuses cut.

The car manufacturer, the only one to record a decline in sales in the first quarter of 2016 among the top 10 selling brands in the EU, indicated it was yet to quantify the whole cost of the emissions scandal after the publication of the results of an investigation it commissioned from a US law firm was postponed.

However, initial estimates suggest one of the lawsuits in the US, where it also faces a criminal probe, could see VW having to buyback 500,000 cars at a cost of £7bn. The group also faces a class-action suit in Germany, which was recently joined by Norway's wealth fund after it alleged VW had not done enough to reform the company since the scandal was discovered.