German Carmakers Seek 40-Hour Week to Cut Costs
German automakers propose extending the workweek to 40 hours without pay raises to combat high costs, sparking fierce union opposition.
Key points
- German automakers propose a 40-hour workweek without pay raises to cut labor costs by 13%.
- Employment in the sector has dropped from 830,000 in 2018 to below 700,000 today.
- IG Metall opposes the plan, arguing that weak demand, not working hours, is the main issue.
Germany’s automotive sector is grappling with a structural crisis driven by rising production costs, US tariffs, and intensifying competition from Chinese manufacturers. In response, industry leaders including Volkswagen, Mercedes-Benz, and BMW are proposing a shift from the standard 35-hour workweek to a 40-hour week without corresponding wage increases. This move is intended to reduce labor costs per unit and restore the sector’s global competitiveness, though it risks igniting a major labor dispute.
According to Deutsche Welle, the industry has already shed more than 130,000 jobs since 2018, with employment dropping from approximately 830,000 to below 700,000. Volkswagen aims to cut 100,000 jobs globally by the end of the decade, while BMW plans to reduce its workforce by up to 8,000 by 2027. Experts warn that without significant cost reductions, the sector could see employment fall to 500,000 by 2030.
High labor costs drive proposal
The core of the debate centers on the disparity in labor expenses between Germany and its international rivals. A report by consulting firm Oliver Wyman indicates that German labor costs average $3,307 per vehicle, compared to just $769 in Japan and $597 in China. Ferdinand Dudenhöffer, director of the Center for Automotive Research, argues that extending the workweek would lower personnel costs by 13%, effectively creating the financial conditions necessary to keep production in Germany.
Dudenhöffer contends that the 35-hour week, established through collective bargaining in the 1980s and 1990s, reflects a bygone era of high competitiveness. He emphasizes that the current proposal is not about reducing take-home pay but about adjusting the cost structure to prevent further job losses. However, critics argue that the industry’s primary issue is weak demand rather than an insufficient number of working hours.
Unions reject wage concessions
Christiane Benner, head of the influential IG Metall union, strongly opposes the proposal, viewing it as an attack on workers' rights. She notes that employees have already accepted wage cuts and concessions worth billions of euros, yet management is demanding further sacrifices. The union maintains that increasing working hours will not stimulate sales, stating that no additional cars will be sold simply because the workforce spends more time on the assembly line.
To protest the job cuts and the push for longer hours, IG Metall is organizing demonstrations at more than 200 locations across Germany. The union argues that the current crisis stems from underutilized capacity and global market shifts, not from the length of the workweek. They warn that accepting such terms would set a dangerous precedent for labor standards in other German industries.
Future of German manufacturing
Stefan Bratzel, head of the Center of Automotive Management, describes the situation as an inevitable conflict between management and labor. He acknowledges that mathematically, more hours for the same pay lowers the hourly cost, but he highlights the deeper question of how the burdens of the industry's transformation should be distributed. The outcome of this standoff will likely determine the future viability of manufacturing hubs in Germany as the sector continues its transition to electric vehicles.
