In a move that will surely raise the hackles of Germany’s labor unions, two leading economic and industry figures proposed introducing a 50-hour workweek as a means to reduce the country’s staggering unemployment rate.
Unions are fighting to keep a weekly work time of 35 hours
The suggestion is part of a reform debate in Germany on how to cut costs to make the world’s third largest economy more competitive in the global market.
The problem is two-fold. Germany is losing jobs to lower wage countries and consumers at home, who are either unemployed because of the job-drain or worried about losing work, aren't loosening their purse strings either.
The result is devastating for the German economy, which has been more or less stagnant over recent years. Exacerbating the problem are pension and health reforms introduced by the Social Democrat-Green Party government which mean less money in retirement and higher healthcare costs for patients.
The upshot is that Germany has found itself in a vicious circle. If it reduces government spending, taxpayers will have fewer services or have to pay more. But with lower wages and an uncertain future, people will not be able to pay for the essential goods and services they need.
Will a longer workweek save jobs?
For literally years now, the question has been: How to solve this dilemma? The latest remedial suggestion comes from Klaus Zimmermann, the president of the German Institute for Economic Research and Ulrich Ramm, chief economist at Germany’s third largest bank, Commerzbank.
Both men have proposed introducing a 50-hour workweek to prevent even more jobs being exported to low-wage countries. Ramm said he thinks Germany has room for more jobs, but they have to be affordable.
High wages make production in Germany more expensive than in other countries.
"I can see a realistic chance for discussion and we should perhaps work a bit more because in Germany we have a lack of payable labor and it's not the lack of labor overall," he said.
In Ramm’s view, the 50-hour workweek would not be permanent: By establishing a work-hour account of up to 50 hours for peak production periods, when production slowed, employees could work 30 hours instead for the same pay, he said.
Michael Hüther, director of the German Economic Institute, agreed with Ramm’s assessment and argued for a generally more flexible workweek. Still others, like Gerhard Handke, from the German Wholesale and Foreign Trade Association, think workers should also give up a week’s vacation per year to make Germany more competitive.
Handke pointed to Ireland, where workers have just 20 days off a year, compared to six weeks in Germany. Handke reduced the situation to a simple formula: You cannot remain affluent and continue working less than everybody else.
An "abstruse proposal"?
Meanwhile, one of Germany’s most prominent economists, Peter Bofinger, a professor at the University of Würzburg and a member of Germany’s prestigious group of economic advisers, known as the “Wise Men,” is opposed to a longer workweek. He conceded that longer hours are good for business, but warns of dangerous deflationary pressures when consumer buying power declines:
"Working longer means there will be less purchasing power in the hands of workers and given that we have a problem with our domestic demand this problem will be aggravated," he said. "As the example of the Japanese economy shows, if you reduce wages in a relatively large economy in order to boost employment, you get just the opposite effect."
Bofinger, at least, can be sure of support from Germany’s labor unions. The head of the country’s construction and agriculture union, Klaus Wiesehügel, called the 50-hour week an "abstruse proposal" that would generate more unemployment. Even the chairman of Germany’s technology giant, Siemens, Heinrich von Pierer, said that talk of a 50-hour week was not very helpful in the current climate and would make people more insecure.