German business leaders are calling for an increase in the weekly working hours from 35 to 40, without a corresponding rise in pay, to address the country's declining industrial competitiveness. Major companies, including Mercedes-Benz and toolmaker Stihl, support this move, arguing that Germany's high labor costs are a significant hindrance. Martin Brudermuller, chairman of the supervisory board of Mercedes-Benz Group, stated that labor in Germany has become "too expensive" by international standards, leading to a loss of productivity advantage over key competitors. The current average weekly working time across all sectors in Germany is 37.8 hours, though the 35-hour week is a collectively agreed standard for about one-fifth of employees, particularly in automotive, engineering, iron, and steel sectors.
This push comes as Germany's manufacturing sector faces a deepening crisis. Industrial production has fallen by over 15% since its peak in late 2017, impacted by energy price shocks, increased competition from China, US tariffs, and the shift towards electric vehicles. Hourly manufacturing labor costs in Germany are approximately $49.50, which is about 47% higher than the EU average of $33.70, and nearly three times higher than Hungary's $15.60. While German employees are more productive than their Eastern European counterparts, unit labor costs have risen faster since 2023.
Economists and business leaders suggest that a shift from a 35-hour to a 40-hour week without additional pay would increase working time by 14% without altering weekly wage costs. This is seen as a crucial step to make German factories more competitive, potentially retaining production and jobs that might otherwise move abroad. The debate is particularly urgent as approximately 12,000 to 15,000 manufacturing jobs are being lost each month, with companies like Volkswagen indicating significant future job cuts.
However, powerful trade unions like IG Metall, representing over 2.2 million members, argue against the notion of rigid 35-hour workweek constraints. Nadine Boguslawski, head of collective bargaining at IG Metall, states that existing agreements provide companies with flexibility to adjust working hours. Unions contend that longer hours could lead to job reductions by spreading the same amount of work among fewer employees, while employers believe it would protect jobs by enhancing competitiveness. Boguslawski noted that the original push for the 35-hour week in the 1980s aimed to create more jobs by sharing work.
Despite the differing views, economists like Werding emphasize that the volume of available work is not guaranteed and depends on firm competitiveness. They argue that lower labor costs per unit of output could allow German factories to maintain production and employment. The outcome of this debate is anticipated to heavily influence upcoming wage negotiations between unions and employers this autumn, and it remains unclear whether the demand for longer working hours will be included in the agenda.
