So That More Can Work, French Now Working Less

Let captains of industry fume and economists puzzle. Jean-Claude Castex, who keeps the fires burning at one of the most revered shrines in Christendom, thinks France’s groundbreaking law setting a shorter workweek is divine.

“We used to work 39 hours a week. Now we will work 34,” the feutier, or tender of religious candles, at Lourdes, says. “I love walking in the mountains and hunting for mushrooms. I have a wife and two children. Now I’ll be able to spend more time with them.”

Under one of France’s most controversial economic experiments, Castex and 350 other employees at this Pyrenees sanctuary, where the Virgin Mary is said to have appeared in a grotto to a poor miller’s daughter in the 19th century, have been putting in less time, and earning the same money, since spring.

“The sooner we moved to 34 hours, the better it was,” says an enthusiastic Francis Dehaine, a layman who manages the Roman Catholic shrine’s $22.5-million budget and oversees the services offered to 5 million pilgrims who visit yearly.

“The more we reduced the time worked, the better the assistance we could give our visitors,” explains Dehaine. “And we’ve been able to hire 32 more people.”

By deciding to cut the country’s legal workweek to 35 hours from 39, France’s Socialist-led government is seeking a miracle of its own: a remedy to 11.4% employment, among Western Europe’s highest. The idea is to share the work so more people have some.

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This top-down approach to joblessness is the most marked difference between French socialism and the more market-driven ideas of other left governments in Europe, including those of Britain’s Prime Minister Tony Blair and German Chancellor Gerhard Schroeder.

To Anglo-Saxon thinking, the scheme may sound like economic illiteracy. After a year of operation, the full effects of the June 13, 1998, law--which so far has depended on voluntary compliance--have yet to be seen. But the experiment, the brainchild of Employment Minister Martine Aubry, has already had confusing, sometimes unexpected consequences.

Some businesses, such as Henri Selmer & Cie., a manufacturer of saxophones in the Paris suburb of Mantes-La-Ville, have used the shorter week to push for changes that make employees’ schedules more flexible, so they better fit demand.

Instead of putting in an identical number of hours year-round, the usual practice in France, Selmer’s labor force has agreed to work 30 hours some weeks, 40 hours others. That should help the firm better meet orders that peak each September when music students enter conservatories.

In theory, such worker flexibility could boost productivity enough to offset the higher costs that inevitably result from a government policy that promises the same pay for less work.

“This is a real cultural revolution,” declares Robert Sancelm, a government official in the Hautes-Pyrenees region of southwestern France in charge of helping enterprises and unions agree how to reduce the workweek. “People will have to work in teams, and work will have to be rethought in terms of tasks and not of hours put in. We’ve been living in the mind-set of the 19th century.”

But it is too early in the experiment to know whether such change will take hold across France or can be applied to all types of businesses. If not, some economists warn, France could find itself an island of uncompetitiveness within the increasingly free-market European economy.

Indeed, economists predict the 35-hour week may have the opposite of the intended effect: a net reduction in employment. And the first victims are liable to be the workers at the bottom of the pay scale.

Jacques Maillot, president of Nouvelles Frontieres, which organizes popular charter flights and vacation packages, condemns the law as “idiotic and useless.” He’s happy to pocket $2 million of the aid the government has been dishing out to ease the transition to a shorter week, but he is also confident his business on its own could have created the 104 new jobs he’s being rewarded for.

Last year, under its own steam, France’s economy, one of the most robust in Western Europe, grew at a healthy 3.2%, enough to create an estimated 350,000 jobs, the most since 1989.

As of June 30, Aubry’s ministry claims, the 35-hour law had generated or saved nearly 86,000 other jobs, arithmetic disputed by independent analysts, who put the number at about half that. Whatever the figure, there’s a long way to go to reach the 400,000 promised by the Socialists.

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For many members of the patronat, the leaders of French business and industry, the 35-hour project has become a symbol of their country’s enduring lack of faith in the marketplace as the best generator of growth and jobs.

“This is a decision of a political nature that deliberately ignores economic realities,” charges Bernard Boisson, counselor at the Movement of French Enterprises, the country’s main Paris-based business lobby. “It’s even graver, we think, because France is the only country to put this program in place, with no other European country doing likewise.”

To sugarcoat the scheme, a five-year schedule of government givebacks has been drawn up, with businesses that adopt the shorter workweek before it becomes a legal obligation reaping the biggest bonanza of reduced social security taxes and other payroll charges.

But according to the employers’ organization, only 5,000 to 6,000 of France’s million-plus companies so far have signed the type of accord with their labor force that Aubry wants, one that voluntarily reduces time worked by existing employees so more people can be hired.

The pacts reached so far cover about 1.7 million workers--but almost half are in state-run companies such as the national railways or electricity and gas companies.

Aubry, the politically ambitious daughter of former European Commission President Jacques Delors, last month unveiled a proposed new law that business leaders dislike even more.

If passed by the National Assembly, mid-ranking French executives, just like the blue-collar and government workers covered by the original law, will also have to work less. Top bosses would be exempt.

The new measure is much more rigid than the first, and company leaders are complaining loudly that in many instances it actually nullifies key clauses of the latest collective-bargaining agreements reached with employees.

But importantly, Aubry’s new law tacitly gives businesses another year to conform to the 35-hour standard, which is supposed to go into effect for companies employing 20 people or more next Jan. 1. (Smaller firms will be subject to the legislation in 2002.)

Moreover, for the first year, overtime, now usually paid at a 25% premium, might be compensated at only 10% over normal hours--in effect a loophole for employers seeking to avoid further hiring. The current legal ceiling on overtime, 130 hours a year, might be raised to 210 or 220 hours.

“The government is beating a retreat,” declared Francois Goulard, a legislator from France’s opposition center-right Liberal Democracy party. Julien Dray, one of the more radical lawmakers from Aubry’s Socialist Party, complains she has given too many “concessions” to the business community and is undermining the law’s job-generating effects.

Even at the Lourdes sanctuary, one of the first employers in the Hautes-Pyrenees to go to the shorter workweek, confidence in the power of legislation to foster employment is shaky.

“We are creating jobs with other people’s money,” says Roger Marie, union delegate from the Socialist-leaning CFDT labor federation. “We are paying to give work to our children. But we must do it, because if we didn’t, they might not have work.”

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But Lourdes is a showcase for how the law can also be used to modernize the workplace. Even the employers federation admits it has been useful in spurring management and labor, which in many cases were on such poor terms they hadn’t negotiated in years, to hunt for ways to work more effectively together.

“To limit the negative effects of the 35 hours, employees have been perfectly aware that you can’t work less and earn the same--unless you make some efforts at productivity,” says Boisson.

At the Assn. Massabielle, the legal entity that runs the Lourdes shrine, that meant devising 30 work schedules to replace three. Candle tenders, gardeners, sacristans (laymen who change the altar cloths and prepare the wine for Mass) and everybody else also had to agree to forgo raises for three years in exchange for working fewer hours. On the plus side, all employees now get two days off a week.

The new law does not apply to priests, who work 44 to 45 hours a week on average, saying four Masses a day in the Basilica of the Rosary and other sanctuaries.

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Elsewhere, at the Danone subsidiary that bottles Evian mineral water, executives and salespeople agreed to work up to 10-hour days in periods of high customer demand. At the Chantiers de l’Atlantique shipyard in Nantes, whose order book is now bulging, 2,000 welders and other workers agreed to toil on the night and overnight shifts, instead of during daytime alone, as a trade-off for a shorter week.

This kind of job flexibility isn’t applicable to every type of business, nor is it universally popular with French workers or unions. At the Renault auto company’s Cleon factory, the Communist-aligned CGT union recently ordered a strike because in exchange for shorter weeks, management wanted employees to work up to eight Saturdays a year, and for shifts on the assembly line to be 30 minutes longer.

One surprising hotbed of support for the new laws is white-collar employees, who evidently don’t want to miss out on something being offered colleagues on the assembly line. For mid-level managers who put in long days, Aubry is proposing up to 10 more days of annual vacation.

Just as office employees in the United States and other countries seem to be working longer and longer hours, France is sending out labor inspectors to make sure its cadres aren’t spending too much time at their desks. Last month, in a precedent-setting court case, the top executive of a company that makes military radar was found guilty and fined for encouraging managers to put in an estimated 45,000 hours of unreported overtime in 1997 alone.

The silver lining in the Aubry law is the aid lavishly handed out to businesses that have already voluntarily cut the workweek so they can hire more people. At the Lourdes shrine alone, such government largess should exceed $760,000 this year.

“The cost of the new hires is more or less going to be compensated for by the aid I get from the state,” acknowledges Dehaine. The jackpot at Lourdes is even bigger because it cut the workweek in March, and dropped it to 34 hours, fewer than the 35 mandated by Aubry’s law.

But the law also carries costs, some of which are still hard to gauge. The government had promised the 35-hour week wouldn’t mean new taxes, but in part to compensate for the givebacks, it recently announced it will have to raise more than $5 billion in new revenue next year.

Special levies on profits or on industries that pollute are being considered, which could pinch some businesses especially hard and confirm their worst fears about the 35-hour law.

The Socialists and their Communist and Green allies have been adamant that fewer hours cannot mean corresponding cuts in pay. Some economists think that proviso will actually hurt one group the government wants most to help: the 2 million people earning the minimum wage of $6.36 an hour. Already, one French man or woman in four who is 25 or younger, and lacks a degree or special skills, can’t find work.

Consider how the new laws affect a takeout pizza parlor with delivery people paid the minimum wage. In the future, they will work 35 hours a week in lieu of 39, for the same salary. The pizzeria will receive some government aid, but not enough to make it a wash if it hires someone to work the four extra hours.

The gap between givebacks and salaries will lead to a 6% increase in labor costs of minimum-wage jobs, some economists calculate--perhaps enough to discourage more employment at the bottom end of the income scale or even lead to layoffs.

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The Paris-based Institute of Economic and Social Research has found that, historically, there has been no detectable link in Europe between a reduction in work time and a drop in joblessness. Patrick Artus, research director at the Caisse des Depots et Consignations, a government-affiliated investment institution, believes the Socialists’ legislation is foolhardy and could produce a supreme irony: the net loss of up to 200,000 jobs.

“What we are telling people is that you will work less and you will get the same, so it is very difficult to oppose that,” Artus says. “But this is a very biased way of presenting things, because probably it will mean an increase in unemployment, difficulties for small companies, difficulties for service companies.

“But nobody says that,” the French economist complains. “All they say is that you will get the same money and work less.”