German Workers Face Double Squeeze as Automakers Delay Pay and Demand Longer Hours
28.06.2026 - 01:01:46 | boerse-global.de
In an escalation of labour-management tensions across German manufacturing, two of the country's biggest carmakers are pushing employees to accept less now while giving more later — a formula that unions say punishes workers for problems they did not create.
Mercedes-Benz has told roughly 90,000 staff in Germany that a bonus known as the "transformation component" — worth 18.4 percent of one month's salary — will be postponed until 2027. The board cited a deteriorating situation at German production sites and a loss of competitiveness in labour costs. At the same time, management wants to extend working hours without raising pay. Supervisory board chairman Brudermüller backed a return to the 40-hour work week.
The company's works council rejected the move as a unilateral decision. Its representatives argue that the real causes of the economic slump — geopolitical turmoil and high energy prices — are not the fault of employees. Any talk of longer hours, the council added, is a matter for IG Metall and the employers' associations, not for internal negotiation.
The backdrop is a sharp profit slide. In the first quarter of 2026, Mercedes-Benz's group earnings fell 17.2 percent. Over the entire 2025 financial year, profit more than halved from €10.4 billion to €5.3 billion.
Volkswagen row threatens to spill over
Volkswagen, meanwhile, is bracing for a bloody confrontation of its own. Reports indicate the Wolfsburg-based group plans to cut up to 100,000 jobs worldwide, with factories in Hannover and Emden considered at risk in Germany.
The state of Lower Saxony, which holds 20 percent of VW's voting shares, has drawn a firm line. Minister President Stephan Lies publicly rejected any closures, a stance echoed by officials from the Hamburg state government.
IG Metall and VW's works council issued a joint warning against tampering with the VW Law, which gives the state a veto on major decisions, and against undermining Germany's co-determination system. They urged the board to focus on developing competitive products instead of what they called short-sighted, reactive measures.
Unions counter with long-term pension vision
Amid these factory-floor battles, the German Trade Union Federation (DGB) has moved the debate to a different level. A DGB-appointed commission on retirement published proposals to raise the pension replacement rate from its current level to 50 percent initially and later to 53 percent.
The plan's centrepiece is a mandatory company pension scheme under which employers contribute 2 percent of gross wages. The aim: to guarantee retired workers between 70 and 90 percent of their last net income — without raising the official retirement age. The Left Party signalled support; employer associations warned that social insurance contributions could exceed 40 percent of wages.
Pay transparency law in legal limbo
Adding another layer of uncertainty, Germany has missed the deadline to implement the EU Pay Transparency Directive. Although the directive entered force on June 8, the national transposition law is still missing. Public-sector employers must already follow the rules; private companies are operating in a grey zone.
Current data put Germany's unadjusted gender pay gap at 16 percent; the adjusted gap stands at 6 percent. A February ruling by the Federal Labour Court further restricted workers' right to information about colleagues' salaries, limiting requests to the most recent calendar year only.
