Germany produces twice as many cars than the US, while workers are payed twice as much

Article by Christian A., on December 29, 2011

It’s worth analyzing why Germany’s auto workers are paid higher than their counterparts in the U.S. In 2010, 5.5-million vehicles were built in Germany while their workers were paid an average of $67.14/hour. Meanwhile, 2.7-million units were produced in the U.S. while its salaries averaged $33.77/hour. This article from Remapping Debate points out that Germany’s output is two times higher than in the U.S. but its wages are twice as high.

This article further states that in Germany, the automakers operate within an environment that “precludes a race to the bottom” but in the U.S., such a race is encouraged. This means that IG Metall, the counterpart to America’s United Automobile Workers (UAW), aims to ensure high wages and satisfactory working conditions. All of the car workers in Germany are IG Metall members.

They can strike if they choose to but they don’t do it due to a comprehensive conflict resolution system. The article claims that the major difference is that union-management relations in the US are adversarial while they’re collaborative in Germany. For example, non-unionized employees at Volkswagen‘s Chattanooga plant are paid $14.50/hour. After three years, this is raised to $19.50/hour. BMW, which operates a plant in Spartanburg, South Carolina, has easily adapted to the Spartanburg business culture. [source: AutoGuide]

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