Germany's auto crisis: Can the 35-hour workweek survive?

Germany's automotive sector is grappling with a severe crisis due to high manufacturing costs, US tariffs, competition from China, and the shift towards electric vehicles. Major automakers like Volkswagen, Mercedes-Benz, and BMW plan to cut costs and workforce, with Volkswagen aiming to reduce 15% of its global workforce to 100,000 jobs by 2030. The industry has seen a decline in employment from around 830,000 in 2018 to less than 700,000 currently, and experts project it could drop to 500,000 by 2030.

To address the crisis, labor costs in Germany are considered too high, averaging $3,307 per vehicle compared to $769 in Japan and $597 in China. Auto companies seek a shift from the current 35-hour workweek to a 40-hour week without pay increases. However, trade unions, notably IG Metall, oppose longer working hours, arguing that workers have already conceded wage cuts and other concessions. The union contends that the industry's struggles stem from weak demand and underutilized factories, not labor shortages.

Experts believe that reducing the workweek from 35 to 40 hours could decrease personnel costs by 13%. They suggest that while this measure could help, it alone won't solve the industry's structural issues. To regain competitiveness, German automakers must produce affordable electric vehicles, invest in software and AI, and enhance their development and manufacturing processes' efficiency.

Additionally, addressing labor, energy, tax, and infrastructure costs is crucial for the sector's future. However, the path ahead is challenging, and Germany must undertake necessary reforms to secure its automotive industry and jobs.