March 22 (Bloomberg) -- France's parliament voted to effectively rescind the 35-hour work week, raising overtime limits and letting private-sector employees swap time off for more money in a bid to boost employment and incomes.

The National Assembly, the lower house of parliament, today gave final approval to a proposal by President Jacques Chirac's administration to overhaul the seven-year old law passed by a Socialist-led government.

Chirac's backers said longer hours will increase wages and eventually reduce an unemployment rate of 10.1 percent, the highest in five years. A nationwide strike to protest the change and seek higher pay disrupted transport, schools, and postal service on March 10.

``The reform of the working week is significant and not dogmatic, contrary to the legislation introduced by the previous majority,'' Bernard Accoyer, chief of the ruling Union for a Popular Movement group in Parliament, said today.

The 35-hour law, enacted in 1998, became mandatory in January 2001. It has already been watered down. Prime Minister Jean-Pierre in December raised the maximum number of overtime hours per year to 220 per worker from 180. In 2003, that ceiling was lifted to 180 hours from 130.

Higher Limits

The new law allows employees to work beyond the 220- hour overtime limit and up to 48 hours a week if they want. It will also let companies buy back days off that workers don't want and extend for three years a reduced rate of overtime at businesses with fewer than 20 people.

The overhaul is ``a political, economic, and social mistake,'' said Remi Jouan, national secretary of Confederation Francaise Democratique du Travail, France's biggest union, in a statement yesterday. ``Work should be given in priority to unemployed and part time workers who want to work more.''

A parliament report last year concluded that the legislation had helped create 350,000 jobs at a cost of 4.5 billion euros ($5.9 billion). The jobless rate in Europe's third-biggest economy fell to an 18-year low of 8.6 percent in mid-2001 from 11.8 percent at the start of 1998.

The 35-hour week has ``heavily weighed on wage increases,'' French Finance Minister Thierry Breton said March 15, responding to a question from a Socialist lawmaker in parliament. ``You wanted to share jobs, people had to share wages.''

To contact the reporter on this story: Francois de Beaupuy in Paris fdebeaupuy@bloomberg.net.

Last Updated: March 22, 2005 11:00 EST