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Workers' paradise in Germany may be over

Employees of the DaimlerChrysler's main
Employees of the DaimlerChrysler's main site in Sindelfingen, Germany demonstrate against their company's cost-cutting plans on Wednesday.Michael Latz / AFP - Getty Images
/ Source: NBC News

The height of the European summer season has been cold and damp, but the heat has been on German workers ahead of the traditional holiday month of August as they struggle to maintain the luxury of 35-hour work weeks, generous vacations, and a comfortable welfare system.

As the Germans along with their co-workers in other European Union nations gear up for the month-long August holiday, manufacturers like Bosch, Linde and DaimlerChrysler are asking their employees for deep concessions -- and threatening to move production to cheaper eastern European countries should their demands not be met.

Despite rising costs, uncertain job markets and struggling economies, many families will spend five weeks or more on leisure time this summer.

But, under the present economic conditions, economic analysts and politicians are wondering whether Europe can continue to afford so many days off. And German workers, the most pampered of them all, are beginning to realize that the vacation may be over.

Worker’s paradise
Germany and France still enjoy the largest number of vacation days among all countries in continental Europe. The French get 30 days of paid vacation with an additional 11 public holidays, while in Germany workers receive 24 days off, plus up to 13 religious holidays.

By comparison, workers in Japan vacation on average 18 days a year and Americans have only 10 days off per year.

Germany's economy has been stagnating for years, choking from enormous labor costs, which are the second highest in the world. Economists believe that working harder, often without extra pay, will be difficult to avoid in the future.

A conservative politician in the northern German state of Schleswig-Holstein recently sparked a renewed public debate about German work laws, when he openly called for a reduction of Germany's public holidays.

Germany's largest and economically strongest state, Bavaria, enjoys 13 "bank holidays,” while some states only get a total of nine public holidays.

"Our country needs a uniform holiday regulation because every additional work day will bring economic growth," conservative party politician Peter Harry Carstensen told the weekly Bild am Sonntag newspaper.

Petersen's remarks were immediately met by strong criticism from Germany's influential churches and the country's mighty labor unions.

Protests against new plans
Economic leaders in Germany have repeatedly argued that a 35-hour work week, which applies to public and private sector jobs in the western part of Germany (eastern Germans work on average 38 hours per week), is no longer feasible if European countries want to remain competitive in a global market.

"We are experiencing a creeping deterioration of competitiveness," DaimlerChrysler boss Juergen Hubbert told German television ZDF.

In recent years, large German firms such as DaimlerChrysler have stepped up their efforts to press workers for concessions and to abandon the 35-hour work week -- models which were agreed in so-called "tariff agreements" in the early 1980s.

The Mercedes Car Group, the largest contributor to operating profits at U.S.-German automaker DaimlerChrylser, has asked employees at its largest plant in Sindelfingen to work longer hours without compensation.

The company wanted to cut additional pay for evening and night shifts, as well as the five minutes of paid break time that workers accumulate every hour, in order to meet its goal of saving nearly $600 million.

Workers initially balked, noting increasing vehicle sales in Germany.

But Friday, the parties reached a breakthrough agreement after nearly a week of tough negotiations.

The so-called "employment pact" includes a reduction of more than $600 million in staff costs, while the company in return guaranteed more than 6,000 jobs.

"The achieved agreement is a role model for Germany as a production location," said DaimlerChrysler chairman Juergen Schrempp.

False job security
For decades, the work hours in Germany have fallen, from 48 hours a week in the 1950s to 35 hours in the nineties. At the same time, the amount of vacation days rose in some fields of the labor market above 30 days, while more and more Germans took early retirement.

"Longer work hours will only solve part of the problem," said Hilmar Schneider from the Institute for the Study of Labor in Bonn. "We have to achieve a drastic change in our social welfare system in order to fight unemployment and stagnating growth," Schneider said.

Economic experts complain that high unemployment benefits, which allow workers to reject lower paid job offers, cripple the country's economy.

With more than 4.1 million people out of work and an economic growth forecast of only 1.5 percent -- compared to 4.7 percent in the United States -- dark clouds continue to move in over Germany's economy.

"Unemployed workers have to be taken out of the illusion that they can wait for a well-paid job that will meet their, often high, qualifications," said Schneider.

Even Germany's socialist government, traditionally a strong supporter of union demands, has come to realize that rigid employment laws, a complex welfare system and additional payroll costs -- such as company contributions to health insurance, government pension plans, and unemployment insurance -- have caused a gridlock.

Flexible work hours
"42 hours are reality" read the front-page headline in the national Frankfurter Allgemeine newspaper on Wednesday, citing a study which showed that the average full-time employee in Germany already works nearly 42 hours per week. A figure that is only slightly below the average of the other EU countries.

The analysis, which was conducted by the ISO institute in Cologne, also showed that the average employee would prefer to reduce the overall work hours, even if this would result in less pay.

"Germany has to say goodbye to the fallacy that it will suffice to spread the workload to more shoulders in order to fight unemployment," wrote the weekly newsmagazine Der Spiegel.

In fact, many companies have already implemented longer work hours and more flexible models.

The country'sMittelstand -- small and medium-sized firms that form the backbone of Germany's economy -- have gradually switched to flexible 32- to 40-hour weeks.

Metal manufacturer ThyssenKrupp made the 35-hour week an exception in parts of the company and just last year, reached an agreement with 700 employees, who were willing to drop part of the negotiated salary increases and do without holiday pay.

When Germany's HDW shipyard was bidding for a $153 million building contract, it had the choice of drastically lowering production costs or loosing the deal to its competitors in Korea.

HDW's worker council, the metal union IG Metall and employers agreed on temporary cuts for the 3,200 workers. Until Aug. 31, 2005, employees will have to work 276 additional hours and will receive less for Christmas and vacation bonuses.

An internal company survey showed that 75 percent of HDW's workers "feel good" about the deal, even though it means more work and less money.