The "Work-Life Balance Haven" Faces Upheaval: Labor and Management Clash in Germany Over "Return to 40-Hour Workweek Without Pay Increase"

German Hourly Labor Costs 47% Higher Than EU Average
Management Pushes for 40-Hour Workweek Without Pay Raise
Major Clash Expected in October Metal and Electrical Industry Bargaining

There has been a growing call within Germany's manufacturing industry to revert from the current 35-hour workweek back to a 40-hour workweek.

A photo of the Mercedes-Benz factory in Hungary, a German automobile manufacturer, to help understand the article. Photo by EPA Yonhap News

According to the UK’s Financial Times (FT) on September 2 local time, executives from major manufacturers—including German carmaker Mercedes-Benz and tool manufacturer Stihl—have urged a return to a 40-hour workweek without wage increases. The management's demand being made public has reignited the debate over working hour policies. Martin Brudermueller, Chairman of the Supervisory Board at Mercedes-Benz, stated in a recent interview with Handelsblatt, "Compared to global standards, labor costs in Germany are too high and we have lost our productivity advantage over major competitors," emphasizing, "We need to seriously consider returning to a 40-hour workweek."

The hourly labor cost in German manufacturing stands at 49.5 euros (approximately 78,000 won), the highest among European Union (EU) countries. The EU average is 33.7 euros (about 53,000 won), making Germany’s figure 47% higher. Although Germany has managed to endure high labor costs through a concentration of skilled workers, industrial clusters, and a stable political environment, it is now being observed that this calculation is being undermined as the cost gap widens. The IMK, a think tank supported by German labor unions, has analyzed that, although labor productivity in Germany is higher than in Eastern Europe, labor costs in Germany are rising faster than productivity, resulting in an increase in unit labor costs.

Meanwhile, industrial output has dropped by more than 15% since peaking at the end of 2017. This has been attributed to a combination of rising energy prices, more intense competition with China, U.S. tariffs, and the ongoing transition to electric vehicles. Moreover, between 12,000 and 15,000 manufacturing jobs are disappearing each month, with the current number of people employed in manufacturing estimated at 6.5 million. According to data from the Federal Statistical Office, as of the end of June, the number of workers in the automotive industry had decreased by 42,300, or 5.8%, over the past year to a total of 691,500.

The 35-hour workweek was introduced following a large-scale strike by metalworkers in West Germany in 1984 and, over the following decade, became established throughout manufacturing. Economists who support a return to the 40-hour system argue that increasing working hours and thereby reducing unit labor costs is necessary to protect both competitiveness and jobs in manufacturing.

Martin Werding, a member of the German Council of Economic Experts, assessed, "The existing approach of using temporary workers to adjust for economic fluctuations will not be enough to overcome the current structural crisis." Markus Berret, global head of consultancy Roland Berger, warned, "Depending on the country, labor cost differences can be three to four times higher, and going forward, the number of people employed in German manufacturing could fall below five million."

Friedrich Merz, German Chancellor. Photo by Reuters-Yonhap News Agency

German labor unions are pushing back against these proposals. They point out that companies already have flexibility to increase or decrease working hours as needed, and that raising the standard workweek to 40 hours across the board would reduce employment, since the same output could be produced with fewer workers. Horst Ott, head of the Bavaria branch of the metalworkers’ union IG Metall, argued, "While Mercedes-Benz is calling for a 40-hour workweek, in reality there isn’t even enough work to fill 35 hours," contending that increasing working hours under low factory utilization will only lead to more unemployment.

The proposal to reinstate the 40-hour workweek is likely to be discussed during the upcoming collective bargaining negotiations for the metal and electrical industries set to begin in October. As the manufacturing downturn continues, working hours are likely to remain the most contentious issue in labor-management negotiations.

Meanwhile, in South Korea, there are also calls to ease regulations on working hours for the sake of manufacturing competitiveness. Although the legal working week is already set at 40 hours, the business community is requesting exceptions to the 52-hour weekly cap (which includes overtime), claiming that uniformly applying this limit to research and development work in advanced sectors such as semiconductors and artificial intelligence could slow technological progress. On the other hand, labor groups argue that regulations on working hours are the minimum safeguard for protecting workers’ health rights, and thus oppose any relaxation of the current regulations.

This content was produced with the assistance of AI translation services.