German industrial workers win the right to more flexible hours

Germany’s most powerful labor union, IG Metall, has won the right for industrial workers in the south-west of the country to reduce their weekly hours from 35 to 28 for up to two years to look after their families.

Employees will be allowed to reduce their working week while preserving the right to return to full-time work at a later date. In return, companies will be able to increase the working week to up to 40 hours for those willing to work more during times of skill shortage. 

“Modern economies need flexible labor markets with variable working times across occupations and sectors in the face of rapid technical change,” notes Peter Dolton in his IZA World of Labor paper on working hours.

The union and the Südwestmetall employers’ federation also agreed a 4.3% pay rise in a deal that stretches over 27 months and includes additional one-off payments.  

The deal covers nearly one million employees in the metals and electrical industries in Baden-Württemberg, home to multinational corporations Daimler and Bosch. It could be extended to the 3.9 million workers in Germany’s industrial sector as IG Metall’s agreements tend to be seen as a benchmark for the rest of German industry.

“In many countries, the minimum wages and working conditions set in collective bargaining contracts negotiated by a limited set of employers and unions are subsequently extended to all the employees in an industry,” explains Ernesto Villanueva in his article on the wage and employment effects of extending collective agreements. Such extensions ensure common working conditions, limit wage inequality, and reduce gender wage gaps. 

Villanueva notes, however, that several studies suggest those benefits come at the cost of reduced employment levels, especially during recessions. “Allowing firms to opt-out and requiring bargaining parties to represent a majority of employers and employees in the industry may reduce the costs of extensions,” he says.

Read more articles on trade unions, collective bargaining, and the labor market 

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