Mercedes freezes bonus for 90,000 workers and demands more work for same pay as German costs bite
German carmaker Mercedes-Benz is deferring a special payment that 90,000 employees would have received in July and wants them to work longer hours for the same money, citing high German production costs and a China sales slump.
Immediate measures
Mercedes-Benz informed its German workforce on Friday that the annual "Transformationsbaustein" bonus, worth 18.4 percent of a regular monthly salary, will not be paid in July as originally planned. Instead the payment is being postponed to 2027, a move that affects roughly 90,000 of the company's 108,000 employees in Germany. The board said the step was necessary because production costs at the home base had grown too high relative to international competitors.
Why Germany is too expensive
The board letter, signed by CEO Ola Källenius and his colleagues, argued that the German site had lost competitiveness. It pointed to plant capacity well above demand, a sickness rate that is sometimes many times higher than abroad, and a lower number of annual working days.
The manufacturer said some products and administrative functions would be relocated to more competitive international locations, although two-thirds of the workforce is currently based in Germany.The working hour has to become cheaper – in development, sales, administration and production. The most direct and, in our view, fairest way: we should all work more for the same money.
Works council pushes back
The company's general works council criticised the bonus deferral as a "unilateral decision" and said the causes of the current challenges did not lie with employees. It added that the demand for longer hours with no extra pay was not a convincing concept for the future, especially with already low capacity utilisation at German plants.
Supervisory board chairman Martin Brudermüller had recently suggested a return to the 40-hour week; the current standard in the German auto industry is 35 hours.Anyone who defines competitiveness primarily through unpaid longer working hours is making it too easy for themselves.
Financial backdrop
Mercedes has been battling headwinds for some time. Group profit fell 17.2 percent in the first quarter of 2026. In 2025, earnings halved from €10.4 billion to €5.3 billion after a weaker 2024. Tariffs, adverse exchange-rate movements and intense competition in China have weighed on results, and both sales and revenue have declined.
- 2024
- 10.4 € bn
- 2025
- 5.3 € bn
