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

Germany's automobile industry is currently grappling with a significant crisis, driven by rising manufacturing costs, increased US tariffs, fierce competition from China and the transition to electric vehicles. Major automakers like Volkswagen, Mercedes-Benz and BMW have announced plans to reduce production and cut costs. Volkswagen, for instance, aims to eliminate about 15% of its workforce worldwide by the end of the decade, while BMW plans to cut up to 8,000 jobs by the end of 2027.

The industry is losing competitiveness as production shifts abroad, according to Ferdinand Dudenhöffer, director of the Center for Automotive Research. In 2018, the industry employed approximately 830,000 people, but currently, the number is around 700,000, with projections suggesting it could drop to 500,000 by 2030. To regain competitiveness and secure jobs, measures such as lower production and energy costs, enhanced logistics infrastructure, and favorable tax conditions are necessary.

Labor costs in Germany are deemed excessively high compared to international counterparts. At an average of $3,307 (€2,882) per vehicle, they are considerably higher than Japan's $769 and China's $597. To address this, carmakers are pushing for a shift from the current 35-hour workweek to a 40-hour week without any pay increase.

However, this proposal has faced strong opposition from workers' unions, who argue that weak demand and underutilized factories, not a lack of labor hours, are the primary issues. The IG Metall trade union, for instance, has organized demonstrations nationwide opposing job cuts and other measures affecting working conditions.