Saturday, February 12, 2005

Europeans suffering more hours on the job

This is an interesting article. I remember there was an economist, Richard Layard, gave a series of lectures "Happiness: Has Social Science a Clue?" at the Lionel Robbins Memorial Lectures (2003-2004, London School of Economics), about work hours, income, and life satisfaction (happiness).

On average, continental Europeans work 15% fewer hours than Americans, and have much higher taxes [according to "the Economist" - August 7, 2003, "Chasing the dream", 60% is a "typical European level of taxation" (taking both direct and indirect taxes into account)]. Also, Europeans generally take more holidays than Americans. Americans on average have 16 days a year, but most only take 14. Italians get 42 days off a year. The French gets 37. The Germans get 35, and the British gets 28!!

Now the French government is trying to get its people to "work more". Will this be the new trend in continental Europe?

Europeans suffering more hours on the job

From Saturday's Globe and Mail (Toronto, Canada)
Saturday, February 12, 2005 pA1

LONDON -- Five years ago, France joined Europe's largest nations in a radical experiment: to try to create hundreds of thousands of new jobs and improve the quality of life by having existing employees work shorter hours.

This week, that bold project began to derail: France's legislature voted to crack open the 35-hour workweek and allow people in the private sector to work as many as 48 hours a week.

At the same time, Germany lengthened the workweek for some public employees, while allowing the largest corporations to negotiate longer working hours.

What happened? Did the experiment fail? European governments, facing high unemployment and spiralling fiscal crises, effectively told their workers to follow the lead of countries such as Canada, where people work a lot more hours than they did a couple of decades ago -- without making any more money, in real terms. This, they argue, is the only way to remain competitive in the global economy and to attract investment.

Lengthening the workweek is an unpopular move that governments say is necessary, and which they have promoted aggressively to foreign investors. It's an important symbol. Yet economists are quietly pointing out that Europe's short workweek, generous vacations and lavish maternity-leave packages have not had a major effect, positive or negative, on productivity or competitiveness. Across Europe, noses are being pressed to grindstones in a rapid conversion to the Anglo-American way of work, and people are far from happy about it.

Just look at the 256 full-time employees of Chausson Tools, a financially troubled auto-parts company in the French city of Rheims.

In a devil's bargain last week, they were forced to decide between time and security. In a shop-floor ballot, the company gave them two choices: They could increase their workweek from 35 hours to 37.5 hours, at the same salary. Or they could keep their leisurely working hours and 80 of them would have to be laid off. There was little doubt how the vote would turn out. Of the 207 employees who participated, 180 voted to risk their jobs to avoid working 90 more minutes a week.

Their sacrifice, unthinkable to North American workers, would be fully understandable to most people in Europe. As the French National Assembly voted on Wednesday to change the country's 35-hour law, hundreds of thousands of people took to the streets of Paris in protest.

The shorter workweek is part of a dramatic contrast between the European and North American styles of work. Most French people in professional, creative, academic and administrative jobs actually work far more than 40 hours a week, but the law allows them to average their hours by taking extra time off beyond the month that they are entitled to.

The moderately conservative government of Prime Minister Jean-Pierre Raffarin launched the longer workweek law with the slogan "work more, earn more."

Underlying the new program (which still must be passed by France's Senate, after three days of debate beginning March 1) is a sense that France has a reputation as lazy and uncompetitive.

"Our country," Finance Minister Herve Gaymard said in a press conference this week to promote the law, "is not destined to become a museum in which you eat well."

That image has come to overshadow the reality of the shorter workweek. While Europeans, in general, both work and earn less than North Americans, hourly productivity rates in France and Germany compare favourably with the United States and are slightly ahead of Canada.

Paul Swaim, an economist with the Organization for Economic Co-operation and Development in Paris, co-authored a study recently that concluded that working hours have little major economic effect, and that Europe's short-week laws may have had a beneficial effect by making working hours more flexible.

"As the law was being phased in over its first few years, during that time employment grew fairly well in France, and most [economists] felt that was partly due to [the] 35-hour week," Mr. Swaim said. "Most researchers think that during the time of the program there was some positive effect on employment, but probably fairly small."

But the last two years have seen fiscal crises and rising unemployment, which politicians have blamed on the shorter hours.

Mr. Swaim said that the 35-hour week has probably had a slightly positive, but mainly neutral, effect on the economy.

Even the French officials responsible for the change acknowledge that the 35-hour week had little negative effect on productivity, profitability or competitiveness.

"It was always much more a question of image than reality," Clara Gaymard, the French ambassador-at-large responsible for international investment, said in an interview yesterday.

"The idea that a law should decide how many hours you work is absurd. The perception of France is that we have a very productive work force, but that you have no control over labour. You would have some American investors not looking at France because of that image."

But she is quick to say that France is never going to adopt the largely unregulated working conditions of North America.

"We will never go the way of the Americans because we are not American," she said.

"We have the highest productivity because employees have confidence in their future -- the school is free, the medicine is free, the employment is secure and comes with guaranteed benefits. This makes them devoted to their work."

Most economists feel that the differences between the European and North American systems have more to do with lifestyle: Do you want to make as much money as possible, or do you want to have as much free time as possible?

"If you compare France with the U.S., the Americans are working quite a bit more, but the best guess is the output per hour worked is about the same," Mr. Swaim said.

"So you could say the difference between France and the U.S. is that the Americans decide to work more, and as a result on average have higher income, but also have less time to spend with their family. So who knows who has the balance right?"


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