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Contents of this page:
France's 35 Hour Work Week: Flexibility Through Regulation
35-hour week proves a winner in France
France booms as it moves toward 35-hour work week
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France's 35 Hour Work Week: Flexibility Through Regulation
U.S.-France Analysis, January 2001
Gunnar Trumbull, Center on the United States and France
In June 1998, France's loi Aubry initiated the move to a 35 hour week, a process that became mandatory for all private companies with more than 20 employees in January 2000. The two-fold goal of the Aubry legislation has been to lower the level of unemployment in France and to introduce greater flexibility into French labor contracting. When it was announced, the project was greeted with skepticism verging on ridicule from the economic community. The Financial Times suggested that the law was "little more than symbolic."1 Economist Paul Krugman declared it "conceptually confused."2 The Economist gibed that French workers were unlikely to give up their traditional two-hour lunch break in the interest of flexibility.3 The very notion that flexibility might be created through intensive government intervention is peculiarly French. More peculiar still, the policy may actually be working.
The success of the program is admittedly mixed. Measured in terms of employment creation, the success is probably more apparent than real. According to the OECD, French unemployment, which peaked at 12.4 percent in 1997, will fall to 8.8 percent by 2001.4 In fact, strong economic growth has created most of these jobs. Even the Jospin government attributes only about one fifth of the new jobs directly to the 35 hour work week, and most economists believe the impact has been far less. Whatever the policy's impact on job formation, France's labor unions are happy with the shorter work week for traditional ideological reasons. They feel that shorter working times are simply better for workers' quality of life, and recent polls of white collar workers suggest that they mainly agree with them.5
Measured in terms of workforce
flexibility, the success of the 35 hour work week has been perhaps more real
than is yet apparent. In order to implement the shorter work week, what the
French call the réduction de temps de travail (RTT), all French firms
with more than 20 employees have had to renegotiate their labor contracts.
In exchange for the RTT, workers have generally been willing to accept a more
flexible allocation of their work time, along with some wage restraint. This
has created new opportunities for companies to adapt to disruptive demand
cycles. Samsonite workers, for example, have agreed to work 42 hours per week
in the summer, when the demand for baggage is high, in exchange for a shorter
32 hours-per-week schedule in the winter.6 At Carrefour, the French retail
giant, cashiers have agreed to adjust their duties and work times in accordance
with the number of customers in the store.7 This kind of flexibility is possible
because the loi Aubry requires only that weekly work time average to 35 hours
across the year. This so-called annualisation can reduce the amount of overtime
a company must pay, while also reducing layoffs in the off season.
The big losers, and the ones most likely take to the streets in protest over
the RTT, are those sectors of the economy that cannot increase productivity
through flexible work times. In some of these sectors, like restaurants and
trucking, employees have always worked long and difficult hours. For them,
the 35 hour work week can only drive up labor costs, without much possibility
of offsetting the additional wages through greater worker productivity. The
law will also face strong opposition from small businesses of all kinds. These
small employers typically have fewer options for using their workforce flexibly.
Small retailers, for example, worry that they may not be able to keep their
doors open long enough under the shorter work week. Much of this struggle
still lies ahead, since companies with fewer than 20 employees will be required
to negotiate a 35 hour wage package beginning only in 2002. But already France's
Minister of Economics and Finance, Laurent Fabius, is concerned that the shorter
week might significantly raise costs for small employers. He has called for
greater flexibility in applying the RTT to the small and medium-sized companies.
The Ministry of Employment and Solidarity has so far rejected this proposal,
proposing instead that the government offer tax breaks to compensate for the
additional costs of the 35 hour work week for small industry. More protests
are likely before a formula is agreed upon.
Beyond these short-term adjustments, the RTT has the potential to fundamentally
redefine French labor relations. One of the explicit goals of the loi Aubry
has been to revitalize wage bargaining in France. France has always had a
low level of trade union membership relative to other OECD countries. But
trade union membership today has fallen below 10 percent of the workforce
- down from 28 percent in 1979 - and even below the current US rate of 14
percent.8 In an effort to raise the profile of France's labor unions, the
loi Aubry calls for companies to negotiate their new labor contracts either
with the local labor union or with a representative of one of the main syndicates.
France's unions have greeted this requirement enthusiastically. They see shop-floor
negotiating as one of the few routes to revitalizing France's labor movement,
and expect non-union workers to be drawn to them for assistance.
But this union-bolstering initiative also comes with a risk. French unions
have long enjoyed disproportionate power due to France's system of pattern
wage bargaining. In this approach to wage setting, lead sectors such as automobiles
negotiate wage agreements under the shadow of the state. These outcomes are
then "extended" by the French government to other sectors of the
economy. The problem is that labor contracts negotiated to accommodate the
RTT tend to reflect the idiosyncratic competitive logic of each sector and
even company to which they have been tailored. Big differences in the terms
of the agreements will make any patterning of contracts across sectors and
companies extremely difficult. The stakes for the French trade union movement
are therefore high. The loi Aubry has given them an opportunity to draw in
new membership, but it could come at the cost of a traditional source of union
strength in France.
The loi Aubry may also lead, indirectly, to a fundamental reform of France's
strategy of unemployment insurance. For the government, the RTT has been successful,
but not cheap. As a carrot to induce companies to create new jobs in conjunction
with the move to a 35 hour work week, the government has agreed to subsidize
the social payments (retirement, health care, workers' compensation, and unemployment
insurance) of newly hired low-wage employees. Specifically, any employee earning
up to 1.8 times minimum wage receives compensation for the government for
some or all of their social contribution. By reducing the tax on labor, these
subsidies dampen the cost to industry of the 35 hour week.
The estimated cost of these concessions to the government for the year 2000
runs to 110 billion francs. Even at the highest estimated rate of new job
formation, this amounts to roughly 1.1 million francs, or nearly 200,000 dollars,
per job created. Much of the funding has been raised through growing alcohol
and tobacco tax revenues. But a faster-than-expected adoption of the 35 hour
work week has pushed up the projected cost of the program, and the government
has proposed financing the over-runs out of France's unemployment fund (UNEDIC).
This use is appropriate, they argue, because the RTT will reduce the level
of unemployment, lowering demands placed on UNEDIC. But employers don't agree.
They have put forth a counter-proposal that would lower unemployment costs
by linking unemployment compensation levels to the length of time workers
remain out of work. This, employers argue, would give the unemployed greater
incentives to return to work, thereby lowering the burden of contributions
to UNEDIC. The plan is still being considered by the government, but with
growing pressures for fiscal restraint, and support from one of France's three
big trade unions, the CFDT, reform of France's unemployment benefits will
remain on the negotiating table.
Debates over the impact of the 35 hour work week are likely to persist long
into the future. Ultimately, whether or not the move will help or hurt France's
economy will depend on whether new labor flexibility can create enough productivity
growth and wage restraint to offset the new labor costs associated with a
shorter work week. But whatever the economic verdict, politically there is
no question that the French government has succeeded in applying a complex,
socially contentious, and economically ill-advised policy reform with unexpected
elan. The project's success is especially surprising given the ongoing opposition
of President Jacques Chirac, Jospin's conservative counterpart under cohabitation.
France's 35 hour work week represents, after all, the kind of illiberal government
intervention that globalization is supposed to have rendered virtually impossible
today. It suggests that, even as the French economy makes concessions to the
global economy, these are likely to arrive through a familiar kind of intervention
by the French state.
1 Robert Graham, "French
MPs pass 35-hour week law," Financial Times, 20 May 1998, p 2. [Back]
2 Paul Krugman, "Is Capitalism Too Productive?," Foreign Affairs,
Volume 76, No. 5 (September-October 1997): 79-94. [Back]
3 "Everyone Cross," Economist, 5 February 2000, p 47. [Back]
4 OECD, Economic Outlook, 2000, p 265. [Back]
5 "Pres de deux cadres sur trois jugent leur charge de travail excessive,"
Les Echos, 5 May 2000, p 3; "Les Cadres a 35 heures: Des journées
de travail plus intenses," Les Echos, 6 June 2000, p 51. [Back]
6 David Woodruff, "France Moves Smoothly to Shorter Workweek," Wall
Street Journal, 9 November 1998, p A20. [Back]
7 "How to extract flexibility from rigidity," Financial Times, 29
July 1999, p 25. [Back]
8 John D. Stephens and Michael Wallerstein, The American Political Science
Review, 85/3 (September 1991), p 945; Robert Graham, "Jospin heads for
autumn showdown with employers," Financial Times, 28 July 2000, p 3.
[Back]
Gunnar Trumbull is a research associate at the Center on the US and France.
Note: The views expressed
in this article are those of the author and should not be attributed to the
staff, officers or trustees of the Brookings Institution.
http://www.brook.edu/dybdocroot/fp/cusf/analysis/workweek.htm
Bakers
rise up
From AFP Agence France-Presse
HUNDREDS of French bakers have demonstrated in Paris against the national 35-hour working week, which they say threatens their livelihoods and the quality of their traditional baguettes, croissants and pastries.
Sporting white bakers'
caps and aprons, and with many carrying outsize baguettes, the "boulangers"
said that in a 35-hour regime they would not have the time to make the crisp,
fresh bread which discerning consumers expect to buy.
"Making quality bread takes time. Serving clients early in the morning
and late in the evening is an unavoidable reality for our profession,"
the French bakers' confederation said.
"The quality will be lost, because it takes a long time. It's not possible,"
said Rene, a baker from Seine Maritime, on the northern French coast.
In a bid to create jobs, France has passed legislation reducing the working
week to 35 hours. Since 1982, French bakers have worked under specific legislation
which allowed up to 329 hours of overtime per year.
Bakers said the law was especially hard on bakeries operating with a very
small number of staff, which would either have to push out the bread more
quickly or take on more staff, driving up prices.
France has around 33,000 artisanal bakers, 115,000 salaried workers, and 30,000
bakers' partners who are not considered staff employees.
They produce approximately 72 per cent of the country's bread and sales are
valued at 8 billion euro ($13.65 billion).
Michel, a baker from Meudon, to the southwest of Paris, said the baker's day
started at 3am with the making of bread and ended at 8pm after people returning
from work had picked up bread on their way home to dinner.
Rene, a baker from Alsace in eastern France, said the 35-hour week would help
drive the market towards supermarkets, which sell frozen baguettes and other
ready-made bread products.
http://newslimited.com.au/common/story_page/0,4057,3325795%255E401,00.html
27/11/2001
June 30, 2000: 3:52 a.m. ET
Unemployment dropped to
9.8% in May, ninth consecutive decline
LONDON (CNNfn) - French unemployment fell for the ninth straight month in
May, reaching 9.8 percent as consumer confidence close to an all-time high
and strong economic growth created new jobs in the eurozone's second-largest
economy, an official report said Friday.
The number of people unemployed declined to 2,355,000, the lowest since December 1991, from a revised 2,408,300 in April, the Labor Ministry said.
The trend "maintains the decline of recent months... and is a reflection both of the economic pick-up and the effect of the 35-hour week," Glenn Davies, chief economist at Crédit Lyonnais London, told Reuters. "We could get down to around 9 percent by the end of the year and then head down towards 7-8 percent the following year."
The fall was broadly in line with economists' forecasts, and extended an almost continuous decline in France's traditionally stubborn unemployment since June 1997, when the ruling Socialist coalition inherited a jobless rate of 12.6 percent.
The fall was more good news for Prime Minister Lionel Jospin, who pledged earlier this year to drive unemployment below 10 percent by the end of 2000.
Separately, national statistics office INSEE said producer prices, excluding those in the energy, agriculture and food sectors, rose 0.1 percent in May from the previous month, and were up 2.5 percent compared with May 1999.
http://money.cnn.com/2000/06/30/europe/french_jobless/
35-hour
week proves a winner in France
By PATRICK BISHOP
PARIS, Tuesday 2 January 2001
If the Jeremiahs were
to be believed, it was an act of staggering naivety. The idea that a Socialist
minister, a woman at that, could create jobs by reducing working hours was
preposterous.
But a year after the introduction of the 35-hour week, the French economy
is flourishing. Unemployment is falling, growth is steady and the workforce
is happier than at any time in recent memory.
The legislation introducing the measure bears the name of Martine Aubry, the
former employment minister and no-nonsense daughter of Jacques Delors, European
Commission president in its federalising heyday.
As the effects of her law kick in, amateur sportsmen and women, working mothers,
travel agents and a host of other beneficiaries have much to thank her for.
The new rules laid down a limit of 35 hours work a week, initially in enterprises
with more than 20 workers. The measure will extend to small firms in 2002.
To comply, employers have had to grant extra holidays. The five million workers
who are so far affected have an average of 15 more days off a year.
A snap poll taken at a Paris office last week revealed everyone questioned
was delighted with the results.
For Sandy, it meant longer sessions at the gym; for Estelle, more time with
her baby; and for Fred, extended weekends skiing.
The snapshot seems to apply generally. A report the other day in FranceSoir
said subscriptions to the leading health club chain had risen by 17 per cent.
The traffic in Paris thins out dramatically on Wednesdays, when many working
mothers spend a day off with their children.
It is unsurprising, then, that a recent survey found 80 per cent of workers
thought the 35-hour week "positive or very positive for them personally".
But what about the bosses, who argued that the measure would make the labor
market, already burdened with heavy social charges, even less competitive?
Some employers - currently the builders - are still fighting a rearguard action.
But most seem to have accepted the Aubry law.
The figures are against them. The indices are open to interpretation, but
the overall trend shows a long, slow slide in joblessness since the Socialist-led
government took over in 1997.
It was announced last week that unemployment had fallen to a nine-year low.
At 9.2 per cent, the rate is still a shade higher than the euro-zone average,
but if the decline continues the government is on track for its target of
7 per cent in 2004.
That, said Employment Minister Elisabeth Guigou, made 2000 the best year in
terms of job creation for a century.
Mrs Aubry, then, can hope to go down in French history as the patron saint
of living well. Her name is oddly absent, though, from politics these days.
Last autumn she quit one of the most important cabinet jobs to concentrate
on becoming mayor of Lille.
But her supporters say she is only retreating to prepare for a bigger challenge.
Her eyes are believed to be on the country's top job. France has never had
a woman president. When the time comes, the votes of the nation's grateful
workers could well make her the first.
DAILY TELEGRAPH
http://www.theage.com.au/business/2001/01/02/FFXQJJK0FHC.html
France
booms as it moves toward 35-hour work week
by Molly Schuetz
Bloomberg News Sunday, November 28, 1999, 08:02 p.m. PST
PARIS - Bernard Rocquemont, the former head of the radar unit at Thomson,
probably wanted to build the best radar systems, and his staff worked long
and hard to do so.
They worked too long, by the reckoning of the French government. For allowing
his staff to work too many hours, Rocquemont wound up with a 93,000-franc
($14,924) fine and a criminal record.
The 55-year-old was charged this June for not recording the hours his team
of engineers worked, which was well beyond the legal weekly limit of 39 hours
back in 1996, when work inspectors swooped in.
His trial and conviction were headline-grabbing reminders that France is serious
about shortening the work week to try to create jobs and battle an 11.1 percent
jobless rate. It also suggested what could be in store as France prepares
to further shave the work week to 35 hours starting in January.
Many executives howl that the law requiring a shorter work week will make
them uncompetitive. "This is the most absurd and anti-economic law France
has ever thought up," said Daniel Harari, chief executive of Lectra Systemes,
a Nanterre, France-based software maker.
France's plan to reduce the work week - which it contends will force companies
to both become more productive and hire more workers - was drawn up during
the election campaign that brought the Socialists to power in June 1997. They
won in part by promising to shrink an unemployment rate that is the second-highest
among the seven largest economies, behind only Italy's.
On Jan. 1, all of the 80,000 companies in France with more than 20 employees
will have to limit workers' time on the clock to 35 hours a week, or 1,600
a year. The other 1.2 million smaller companies will need to follow suit in
2002.
While some companies say they will wait for the final draft of the law before
implementing a 35-hour week at their business, some 16,000 companies, covering
more than 2 million workers, have already agreed to adopt the new regime.
Some companies like the law and have seized on the newfound flexibility and
productivity they could wring from it. Pates Alpina, a 134-year-old pasta
maker, has found that the new law lets it concentrate production during the
winter, when people bulk up on carbohydrates to keep warm, and reduce output
to three of every four weeks during the summer.
For other companies, which are new and struggling or for those that don't
operate on a seasonal calendar, flexibility is no salve for a shorter week.
Particularly alarming is that many of these firms are software makers and
other fast-growing enterprises, which accounted for about 17 percent of the
265,000 private-sector jobs created last year.
The government reckons that companies will make up for the 10 percent shorter
work week through increased productivity and hiring new people.
France already had one of the best growth rates among major European economies
since last year, even though its workers don't log the most hours.
French workers averaged a 39.7 hour work week in 1998, according to a European
Commission report. That ranked France smack in the middle of the 15 countries
in the European Union. The United Kingdom, by contrast, had the EU's longest
average work week, 44 hours, and its economy grew only 2.1 percent last year.
If it sticks to a strict 35-hour maximum, France will have Europe's shortest
work week, well behind Italy, which averaged 38.5 hours last year. But the
French government, as well as the International Monetary Fund, still forecast
that France's economy will outpace those of other industrialized nations next
year by expanding as much as 3 percent.
Copyright © 2000 The Seattle Times Company
http://seattletimes.nwsource.com/news/business/html98/fran_19991128.html
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