German automakers push 40-hour workweek as industry battles existential crisis

Germany's automotive industry is contracting faster than any other manufacturing sector in the country, and the companies that built the nation's postwar prosperity are now locked in a bitter standoff with unions over how to survive. The fight centers on a deceptively simple proposal: German carmakers want their workers to put in 40 hours a week instead of 35, with no additional pay. Volkswagen, Mercedes-Benz, and BMW have all announced major restructuring plans. Volkswagen alone is targeting a 15 percent workforce reduction—roughly 100,000 jobs—by the end of the decade. BMW plans to cut 8,000 positions by the end of 2027. Suppliers like Bosch and ZF Friedrichshafen are announcing thousands of layoffs. The numbers tell a story of rapid decline: in 2018, the automotive sector employed around 830,000 people. Today that figure has fallen below 700,000. Researchers at the Center for Automotive Research project it will sink to 500,000 by 2030.

The industry faces a convergence of pressures that executives say is existential. Manufacturing costs in Germany remain stubbornly high. American tariffs have bitten into margins. Chinese competitors are advancing rapidly. The transition to electric vehicles is proving more expensive and complex than many anticipated. Production is shifting to lower-cost countries. In this environment, German carmakers have identified labor costs as a lever they can actually pull. The numbers are stark: German manufacturers spend an average of $3,307 per vehicle on labor, compared to $769 in Japan and $597 in China. To narrow that gap without cutting wages outright, the industry is pushing for longer working hours at the same pay.

The 35-hour workweek is not some recent indulgence. It emerged from collective bargaining agreements negotiated in the 1980s and 1990s, when Germany held commanding market share and could afford to offer workers both security and time. That era, industry analysts say plainly, is finished. Ferdinand Dudenhöffer, director of the Center for Automotive Research in Bochum, estimates that moving from 35 to 40 hours would reduce personnel costs by 13 percent—a meaningful reduction without eliminating jobs outright. "We wouldn't be taking money away from employees, but we would be creating conditions that would make jobs possible in Germany, in the automotive industry, in the future," he told Deutsche Welle. The logic is straightforward: spread the same payroll across more hours, and the hourly cost of labor drops.

Unions see the proposal as a betrayal. Christiane Benner, head of the influential IG Metall trade union, points out that workers have already accepted wage cuts and other concessions worth several billion euros in recent years. Now they are being told it is still not enough. The union's position is that the industry's problem is not a shortage of labor hours but weak demand and factories running below capacity. "Not a single additional car will be sold just because the workforce works longer hours," IG Metall announced. On September 21, the union held demonstrations at more than 200 locations across Germany to oppose job cuts and changes to working conditions. The conflict is not merely economic; it touches on the fundamental question of who bears the cost of the industry's transformation.

Stefan Bratzel, head of the Center of Automotive Management in Bergisch Gladbach, acknowledges that the 35-hour week represents a historic achievement for German unions in collective bargaining, so "conflict is inevitable." But he also notes that the math is real: more hours for the same pay does mathematically lower hourly labor costs. The deeper question, he suggests, is how the burden of the current transformation will be distributed between companies and workers. Yet even Bratzel and Dudenhöffer agree that longer working hours alone cannot solve the industry's structural problems. "Working five hours more per week alone will not win the technological race against China," Bratzel said. German carmakers need to deliver attractive and affordable electric vehicles, invest heavily in software and artificial intelligence, and streamline their development and manufacturing processes. They need to be, as Bratzel put it, "at least as innovative and high-performing in technological terms as they are expensive by international standards."

The experts also point to factors beyond the factory floor. Germany needs competitive conditions on energy costs, taxes, bureaucracy, and infrastructure. Dudenhöffer is blunt about what lies ahead: "The coming years will be very tough. And they will become even tougher if we stick to the status quo and believe we can simply rest on the prosperity we enjoyed 20 years ago." The industry cannot regain competitiveness through working hours alone. It requires action on multiple fronts simultaneously—lower labor costs, lower energy costs, tax reform, better logistics. The question now is whether German carmakers and unions can find a path forward together, or whether the next decade will see the sector continue its rapid contraction, with jobs and production moving to countries where the cost structure is more favorable and the political will to change is less contested.