French Premier proposes cutting Workweek

By Roger Cohen, New York Times, 11 October 1997

PARIS—Facing an abrupt rise in interest rates that could slow the economy, French Prime Minister Lionel Jospin on Friday proposed a law to cut the French workweek to 35 hours from 39 hours as a means to create jobs.

Speaking at a conference of employers and labor unions, he said he would submit draft legislation to Parliament by the end of the year aimed at establishing a workweek of 35 hours by Jan. 1, 2000. The proposed law follows a campaign promise to shorten the workweek. He also proposed state financial aid of about $1,500 per employee next year to any company that would reduce the workweek of employees by 10 percent while increasing its staff by at least 6 percent.

The proposals are aimed at curbing unemployment, now 12.5 percent. Joblessness, which has been rising steadily, especially among the young, has become a major source of anxiety in French society. But Jospin did not explain where the state money to encourage companies to cut their workweek would come from in a budget that must meet rigid austerity measures in order to qualify for the euro, the planned European common currency.

The steps are fiercely contested by most employers, who say the proposals will raise labor costs without creating new jobs. Jean Gandois, the president of the main employers' federation, said Friday that he felt totally deceived by Jospin.

The federation of small companies said: The government's attitude suggests 1939: Defensiveness in the face of global competition that demands effort and audacity.

As the euro creates more and more pressure for the Continent's economies to converge, the proposed measure is particularly sensitive. It reflects an enduring French conviction that central planning can solve economic problems, even as other European countries have rejected such an approach.

Britain and the Netherlands have taken radically different steps toward cutting unemployment by encouraging more flexible labor markets. The more diverse Europe's economies, the more difficult it will be to run them with a single monetary policy.

Those potential difficulties were illustrated on Thursday when France reluctantly matched a German rise in interest rates even though its economy is facing scant inflationary pressure and needs cheap money to spur recovery.

The theory behind the shorter workweek, as Jospin put it recently, is that growth will not suffice to create jobs, so a cut in working time is needed. In other words, it is vain to expect the pie to grow fast enough to feed everyone, so it has become necessary to divide it into smaller slices.

It is our duty to bring hope back to this country and the priority of my government's action is the creation of jobs, lots of jobs, Jospin said Friday.

France has suffered sluggish growth for many years now—an average of less than 2 percent annually since 1981—and many economists argue that the country is simply overregulated to a point that discourages entrepreneurship and hiring.

But there is widespread resistance in France to what is portrayed as the Anglo-Saxon method of job creation: Lower minimum wages, diminished job security and sharp cuts in the charges and taxes that pay for social programs, including unemployment benefits and pensions. In the United States, where people already work about 20 percent more hours per year than in France, the notion of a shorter week to create jobs tends to prompt skepticism. The problem with these ideas is that they preserve the fantasy that this is the direction in which to go, said Steven Englander, an international economist at Smith Barney here. France is not going to create jobs this way.

The shorter week, with no loss of pay, formed a central part of the platform on which Jospin's Socialist government was elected last June. But the government appeared split and hesitant before proposing the law Friday. A few weeks ago Jospin suggested that a 35-hour week might prove anti-economic if adopted too quickly.

The prime minister, however, relies for a core of his support on public employees and labor unions that back the plan. Marc Blondel, the leader of one of the more radical unions, said Friday, The law on a 35-hour week should be adopted as soon as possible.

Jospin was more cautious. He said the conference should open a period of negotiations between workers and employers in which the target should be a 35-hour week, but that both sides would have to show adaptability in order to maintain the competitiveness of French companies.

The government, Jospin said, would provide financial incentives, in the form of tax concessions as well as aid, to companies moving rapidly toward the 35-hour week and hiring new workers. He suggested that employees might respond by showing restraint in future wage demands and flexibility in the organization of work schedules.

In Germany, companies including Siemens and Volkswagen have adopted shorter workweeks with only a modest loss of pay, mainly for older employees. But in return the companies have won big concessions from unions on flexibility in working hours. The 11.7 percent unemployment rate in Germany is a postwar record. Close to 8 million people are officially jobless in France and Germany.