Dismissal Protection Loosening on the Table as German Workers and Employers Clash Over Hours
Published on 07/01/2026 at 13:11 | Redaktion boerse-global.de
A growing number of German employees are quietly taking "soft off days"—using work hours for private errands to manage mounting pressure—while at the same time nearly two-thirds of the population report feeling stressed, according to the TK Stress Report. Behind these coping strategies lies a deeper rift: workers want fewer hours, but industry leaders warn that Germany's competitiveness is slipping.
A KPMG survey of nearly 4,000 employees found that 53 percent of full-time workers would like to reduce their hours. Companies with more than 15 employees are legally bound to approve such requests unless operational reasons stand in the way. Yet those who do cut back face a disproportionately small net-income drop: going from 40 to 30 hours a week reduces gross pay sharply, but the progressive tax system means net income falls by only about 21 percent, according to calculations by the VLH tax advisers. Experts caution that lower contributions now will shrink future pension entitlements.
At the same time, Germany's industrial heartland is under pressure. Volkswagen plans to cut up to 100,000 jobs, and Mercedes reported a profit decline of more than 17 percent in the first quarter of 2026. German labor costs hit €45 per hour in 2025, well above the EU average of €34.90. Leading economists and the CEO of forklift manufacturer Jungheinrich are calling for a return to the 40-hour week without wage compensation. In western Germany, the standard is often still 35 hours, while in the east it is typically 38 hours.
The coalition government, facing an ideologically divided landscape, will discuss a comprehensive reform package at a committee meeting on June 30 and July 1, 2026. A central flashpoint is the planned relaxation of dismissal protection. Among the proposals:
- Exempting startups from the standard rules during their first four years.
- Exempting companies with fewer than 50 employees.
- Removing dismissal protection entirely for high earners—with the salary threshold set between €77,000 and €100,000 per year.
The Verdi union has already signaled opposition. The package also includes tax relief for low and middle incomes, scheduled to take effect in early 2027, and business groups are pushing for investment-friendly tax policies and cuts in red tape.
The desire for shorter hours is not just about lifestyle—it often reflects overload. The TK Stress Report shows that 66 percent of Germans feel stressed frequently or sometimes. Psychologists view the "soft off day" phenomenon as a sign that current productivity expectations clash with everyday reality.
Retaining skilled workers remains tough. A hokify study from January 2026 found that pay is the top reason for changing jobs for more than half of respondents, but extra vacation days and better retirement benefits are gaining importance. In Switzerland, a Rocken survey revealed that 63 percent of professionals would quit their current job for more flexible working models.
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