Volkswagen's hot news: A 33-hour workweek

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.

Reader Comments

Herault

October 9, 2006 4:42 AM

The state of Volkswagen includes part-ownership by the state of Lower Saxony so there is a social element to this sprawling enterprise. High wages and politically-controlled employment bring prosperity to Germany. By manufacturing various auto components in Eastern Europe the German cost base can be reduced. Paying highly-qualified engineers in Germany is possible if the volume of production is maintained thru investment and profits. The point is that making profits is always difficult but achievable. Any VW passenger vehicle must sell for over 20,000 euros if it is manufactured in Germany. Thats why the VW POLO is made in the Czech Republic. The Mexican operation performs a similiar function as a low-cost mfg.base. The VW business model is under constant review but if they can turnout models like the EOS convertible then the company will gain in stature in that part of the market. The Koreans can enjoy their short-lunches and low wages. Europeans/Americans will continue to create unique cars with heart and soul. The size of the profit should never be the only consideration.

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