Germany's Auto Crisis: Can the 35 Hour Workweek Survive?

Why Carmakers Demand a Longer Workweek

German automobile manufacturers argue that extending the weekly schedule from 35 to 40 hours is essential to restore the sector’s global competitiveness. After years of market share loss to electric‑vehicle leaders in Asia and the United States, many executives claim that additional production hours would reduce bottlenecks and lower unit costs.

Competitive pressure from abroad

Over the past decade, rivals such as Tesla and BYD have expanded capacity while keeping labor costs relatively low. A recent study by the German Automotive Industry Association highlighted that German factories operate at an average of 78 percent capacity, compared with 92 percent in some Asian plants. Extending the workweek, the study suggests, could raise utilisation to above 85 percent, narrowing the efficiency gap.

Cost calculations

Management’s cost model assumes that a five‑hour increase per employee would translate into roughly 1.2 percent lower labor cost per vehicle, after accounting for overtime premiums that many firms are prepared to absorb. The savings are projected to offset rising raw‑material prices and the substantial investment required for battery production.

• Higher output per shift reduces the need for additional staffing.
• Longer hours spread fixed overhead across more units.
• Improved schedule flexibility can align better with supplier deliveries.

Union Response and Worker Rights

German trade unions have mounted a coordinated opposition, describing the proposal as an attack on the hard‑won 35 hour standard that was introduced in the early 2000s. The Confederation of German Trade Unions (DGB) stresses that the reduction in weekly hours was a cornerstone of Germany’s social model, contributing to low unemployment and high living standards.

Historical context of the 35 hour week

The 35 hour workweek emerged from a series of collective bargaining agreements aimed at sharing prosperity and reducing joblessness after reunification. Studies by the German Ministry of Labour linked the shorter week to a modest rise in part‑time positions and a measurable increase in employee satisfaction.

Legal framework

German labour law permits changes to working time only through collective agreements or individual contracts that respect the statutory maximum of 48 hours per week. Any unilateral shift by employers would likely trigger legal challenges and could be deemed a violation of the Works Constitution Act.

A report from the ILO notes that reductions in weekly hours have historically correlated with higher productivity per hour, suggesting that the push for longer hours may not deliver the expected gains.

Economic Implications for Germany

Beyond the immediate dispute, the outcome could influence Germany’s broader economic trajectory. The auto sector accounts for roughly 20 percent of industrial output and employs over 800,000 workers directly.

Potential impact on productivity

Proponents argue that more hours will raise total output, but critics warn that fatigue can erode per‑hour efficiency. A 2022 analysis by the European Commission competition policy unit found that extending work hours without corresponding wage increases often leads to diminishing returns after the 38 hour mark.

Risk to employment

If manufacturers succeed in imposing a 40 hour schedule, there is a risk that some firms may cut overtime premiums, which could reduce overall earnings for workers. Moreover, a shift away from the 35 hour model might discourage part‑time arrangements, potentially limiting labour market flexibility for parents and older employees.

1. Higher hours could increase short‑term output but may trigger long‑term wage stagnation.
2. Reduced part‑time opportunities could raise structural unemployment among groups that rely on flexible schedules.
3. Potential legal disputes may create uncertainty for investors and suppliers.

Possible Paths Forward

Both sides recognize that a stalemate would harm the industry’s recovery. Several compromise scenarios are under discussion.

Negotiated compromises

One proposal suggests a pilot program in which selected plants adopt a 38 hour week with a modest wage increase, allowing data collection on productivity and employee health. Another idea involves granting workers the option to volunteer for additional hours in exchange for bonuses, preserving the voluntary nature of the change.

Policy options

The federal government could intervene by offering tax incentives to firms that maintain the 35 hour standard while investing in automation. Alternatively, the European Union might fund joint research on flexible work models that balance output with employee well‑being.

Any lasting solution will need to reconcile the legitimate desire for competitiveness with the social contract that underpins Germany’s labour market.

As negotiations continue, the auto sector’s fate will serve as a barometer for how Germany adapts its industrial policies to a rapidly changing global landscape.