German unions are fighting to defend the 35-hour week
The mood at Gate One of the Mercedes-Benz factory at Marienfelde, on the southern edge of Berlin, was combative. Several hundred people—workers in black factory uniforms and trade unionists in red T-shirts—blew whistles and waved placards demanding “Ola out!” (Ola Källenius is chief executive of Mercedes) and “The 35-hour workweek must stay”. Yasmin Fahimi, who chairs Germany’s trade-union confederation, told them 35 hours was “a red line”. Constantin Borchelt, head of the Berlin branch of IG Metall, the metalworkers’ union, produced a red vest, emblazoned with the number 35 and a smiling sun, worn by workers during the bitter but successful seven-week strike in 1984 that cut the week from 40 hours to 35.
GermanyIG Metall, the world’s biggest industrial trade union, with 2.2m members, had called for a “day of action” on September 21st for car-industry workers. Some 175,000 gathered at 280 events, at places including Wolfsburg (home to Volkswagen), Stuttgart (Mercedes and Porsche) and Ingolstadt (Audi). As well as aiming to defend the 35-hour week, the union wants a 5% pay rise and commitments that jobs and factories will be safe. Südwestmetall, an influential regional employers’ association, declared itself “aghast” at these demands. Talks about wages are due to begin on October 7th. Strikes could start as soon as November 1st. “This autumn will be uncomfortable,” predicts Marcus Berret of Roland Berger, a consulting firm.
On the employers’ side, Mercedes is taking the lead on dismantling the 35-hour week, which is subject to separate talks. “If one carmaker nixes the 35 hours, the others will follow,” says Ferdinand Dudenhöffer, director of the Centre for Automotive Research, a think-tank. Mercedes is threatening to close two German factories unless workers agree to painful measures. It wants to extend the week to 40 hours without extra pay and to reconsider perks such as bonus pay for Christmas and holidays, in a “productivity offensive”.
“It simply does not make business sense to produce cars in Germany any more,” says Oliver Fenzl, a company spokesman. Labour costs have long been higher in Germany than elsewhere in Europe (let alone China), but in the past they were offset by cheap energy, freer trade and China’s voracious demand for German cars, especially premium models with fat margins. But today energy prices are sky-high, trade is less open and the Chinese are making their own cars (including premium ones) in abundance. Mercedes’s sales in China have dropped by 27% and profits by 50% in the past three years; domestic carmakers’ market share has doubled to 70% in the past five. Failure to match Chinese competition largely explains why earlier this month Volkswagen said it would cut 50,000 jobs and close four factories in Germany in the next few years.
Meanwhile the wage gap with the rest of Europe has widened. Hourly pay at Mercedes’s factory in Kecskemet in Hungary is around €15.60 ($17.80); Germans are on €49.50. This year the firm doubled Kecskemet’s capacity to 400,000 cars a year. It is now bigger than any of its German plants.
Union leaders call management’s cost-cutting proposals a “horror catalogue”. Far from accepting a 35-hour week, they suggest cutting it to 30, which they say could preserve jobs and capacity (if at a lower weekly wage). The two sides will probably muddle through for now—compromise is the norm—but they are unlikely to stop the shrinkage of what was once the crown jewel of German industry. In 2018 carmakers employed around 830,000, says Mr Dudenhöffer. Now the figure is 700,000 and he forecasts it will be 500,000 by around 2030. A few years ago this would have been dismissed as a horror scenario. Now a selection from the horror catalogue may be the best option.
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