Germany’s Car Crisis: Can the 35-Hour Workweek Survive?

The German automotive industry is facing a perfect storm of high manufacturing costs, US tariffs, and shifting global competition. As the sector sheds jobs at an alarming rate – Volkswagen alone plans to cut 100,000 positions worldwide by the end of the decade – carmakers are now turning to a familiar fix: making workers put in longer hours without extra pay.

This is not a new debate. The proposed workweek has been a contentious issue for years, with unions strongly opposing any move that would erode workers’ rights and benefits. But what’s striking about the current proposal is its timing – it comes as the industry grapples with a major crisis of competitiveness.

Industry heavyweights like Volkswagen, Mercedes-Benz, and BMW have announced plans to scale back production and reduce costs in response to intensifying global competition from China and the US. Yet, despite these efforts, labor costs remain a sticking point. German carmakers argue that their employees are too expensive compared to international rivals, with labor costs averaging $3,307 per vehicle – significantly higher than Japan’s $769 or China’s $597.

The proposed 40-hour workweek is touted as a solution to trim labor costs by 13%. However, this math ignores the deeper structural problems plaguing the industry. “Working five hours more per week alone will not win the technological race against China,” Stefan Bratzel, head of the Center of Automotive Management (CAM), astutely pointed out.

Experts agree that improving labor costs is only one part of a larger solution required to restore Germany’s auto industry competitiveness. To regain their edge, carmakers need to deliver attractive and affordable electric vehicles, invest heavily in software and AI, and streamline development and manufacturing processes. This will require significant investments, innovation, and risk-taking.

The debate around the 40-hour workweek has become mired in competing narratives about worker rights versus competitiveness. What’s often lost in this discussion is the human cost of such decisions. As workers are asked to take on more hours without extra pay, they’re essentially being asked to absorb the brunt of the industry’s crisis.

This isn’t a zero-sum game where longer working hours directly translate to job preservation. It’s a false promise that ignores the complex interplay between labor costs, technological advancements, and market demand. As Bratzel noted, “Ultimately, this raises the question of how the burdens of the current transformation are to be distributed between companies and employees.”

Germany’s auto industry faces a daunting challenge: it must adapt to changing global dynamics while preserving jobs and competitiveness. The proposed 40-hour workweek is not a panacea – it’s a Band-Aid solution that will only delay the inevitable reckoning with deeper structural issues.

The coming years will be “very tough” for Germany’s automotive sector, as experts warn. And they’re right. It’s time to stop chasing short-term fixes and start confronting the harsh realities of an industry in crisis. The future of German carmaking depends on it – and so do the livelihoods of its workers.