Posted by: Gail Edmondson on October 6, 2006
Volkswagen is like a state unto itself, where the laws of economics don’t apply. In Volkswagen land, otherwise known as Wolfsburg, Germany, a new labor agreement signed Oct. 6 by management and unions calls for a flexible workweek ranging from 25 to 33 hours, instead of the current 28.8 — a four-day regime VW inaugurated in 1994.
One could argue that’s inching progress. But it’s really a poor compromise that won’t buy VW much added competitiveness. Management wanted workers to agree to a 35-hour workweek with no pay raise. And even that was not enough of a jump to close the gap with competitors such as Toyota or Peugeot who work as much as 40 hours a week in eastern Europe at lower wages.
The real dilemma is VW remains seriously averse to getting competitive. Volkswagen’s German factories, which lost several hundred million euros last year, won’t become as productive as those of European rivals under the current agreement. And pressure from the hyper-efficient Koreans and Japanese is going to just keep mounting.
Even France, the country renowned for the shortest workweek in the world and the longest vacations, toils 35 hours a week. The devil-may-care French make Wolfsburgians look really oblivious. At least in France, the misguided notion that a shorter workweek would spur job creation has been roundly discredited, even by leading socialists. And the French 35-hour law is already peppered with loopholes.
And at least the French are wringing their hands about global rivals already eating their lunch. Wolfburgians haven’t even noticed the bill for a decade of labor excess is about to come due.