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

Germany's car industry is grappling with a severe crisis, driven by high manufacturing costs, US tariffs, competition from China, and the shift towards electric vehicles. Major automakers like Volkswagen, Mercedes-Benz, and BMW are planning to cut jobs and scale back production. Volkswagen aims to reduce its workforce by 15%, while BMW plans to cut up to 8,000 jobs. The industry has seen a decline in employment, falling below 700,000 in 2023 from around 830,000 in 2018.

Experts suggest that labor costs in Germany are significantly higher than those in countries like Japan and China, averaging $3,307 per vehicle compared to $769 and $597, respectively. To address this, carmakers are pushing for employees to work 40 hours a week, without wage increases. However, unions strongly oppose this, arguing that weak demand and underutilized factories are the real issues, not a lack of workforce.

Union leaders, like Christiane Benner from IG Metall, claim that workers have already made concessions worth billions of euros and that working longer hours won't increase sales. The 35-hour workweek, a standard in the industry since the 1980s, is seen as outdated and incompatible with the era of increasing competitiveness.

Industry experts argue that reducing labor costs by extending work hours would create conditions for job preservation in the long run, but they emphasize that this alone won't solve the industry's structural problems. To regain competitiveness, German automakers need to produce affordable electric vehicles, invest in software and AI, and improve processes. Additionally, Germany must tackle factors like energy costs, taxes, bureaucracy, and infrastructure to remain competitive in the global market.