Volkswagen's 35-hour week debate: A cure or a distraction?
Germany debates extending the 35-hour week to aid Volkswagen, but analysts say it won't solve demand and structural cost gaps.
As Volkswagen (VW) navigates a restructuring crisis that could see plant closures in Germany, a familiar debate has resurfaced: should the country's iconic 35-hour working week be extended? The discussion pits management and some politicians against unions, with the future of German auto manufacturing at stake.
The 35-hour week is the standard full-time schedule for many workers in Germany's metal and auto industries. It was established through collective bargaining in the 1980s and 1990s after strikes, including a seven-week walkout in 1984 under the slogan "More time to live, love, laugh."
Now, with VW considering shutting four domestic plants and cutting excess capacity, some voices are calling for a shift to a 40-hour week at the same pay. Michael Kretschmer, premier of Saxony—where VW's Zwickau plant is at risk—has backed the idea, citing Mercedes-Benz as an example. Chancellor Friedrich Merz has also warned that the shorter week undermines competitiveness.
However, the numbers tell a complex story. Germany's automotive labour costs are among the highest globally—around $3,307 per vehicle, compared to $955 in Spain and $597 in China, according to industry data. Analyst Ferdinand Dudenhoeffer estimates that moving to a 40-hour week could cut labour costs by about 13%, potentially helping plants stay viable.
Yet economists caution that this alone won't bridge the gap with low-cost producers like China. Carsten Brzeski, chief economist at ING, argues that five extra hours won't close the structural disadvantage. Moreover, VW's core problem is weak demand, not insufficient working hours. With excess capacity already being trimmed, some union representatives and observers say the real need is for fewer hours, not more.
IG Metall, the union representing most VW workers, has firmly opposed longer hours ahead of autumn wage talks. A historical precedent exists: in 1994, VW and the union agreed to a 28.8-hour, four-day week with pay cuts, which helped the company restructure and avoid 30,000 job losses during a sales slump.
As the standoff intensifies, the debate over the 35-hour week may be a symptom of a deeper challenge—how to keep German auto production competitive in a rapidly changing global market.