Brake pads WAGNER or Mintex
Stock pads have always been like that. My MKIV was like that as well especially in the rear. So I changed them with Mintex pads.
For brakes I run Scirocco 10.1 fronts with Mintex red pads, MK3 200mm rear drums- i used to have to be careful when I ran 195/50/15's because of accidental lock, but it's much improved with the 205/50/15's (Toyo R1R's- best tire i've had).
I upgraded the pads and rotors to drilled Zimmerman discs that I painted black except for swept area and Mintex pads from Autotech.
For future reference I use Mintex pad all round (occasionally Pagid) Cross reference Front Pads MDB 2601 Rears MDC 1924 Front 365mm Floating Discs VW PATTERN PART ONLY!
I am very pleased with the brake system end results. ALL new rubber in the whole system: New calipers, new wheel cylinders, new master cylinder and all four new rubber hoses.
I had a similar problem years ago with a set of Mintex pads. This might not be the recommended way to fix it, but I just rubbed the brake pads on the concrete floor to wear them down a little so they fit...never had a problem with them after that.
For JUST street driving (no canyon runs or autox), they are fine. But, they are NOT performance pads, so you don't want to be running on them if you're rcing the car or really hammering the brakes when you drive.
mintex are good, but they are not all they are cracked up to be, try EBC greenstuff pads
Mintex red/Mintex red - mediocre for the street - squeaky on parking brake - slightly less bite than OEM - pads can leave deposits causing warping - very inexpensive - brake dust is easier to wipe off than from other pads
My Mintex Redboxes are ALSO not LOW DUST as claimed by the company. IMO, they dust much more than OEM pads. My Long Beaches always turn gunmetal after 2 or 3 days of daily commuting. Also, the brake pads gives off an unpleasant smell, but not a big issue.
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