International -- European Business: FRANCE
I'LL GIVE YOU A 35-HOUR WEEK, AND YOU GIVE ME... (int'l edition)
Jospin's crucial struggle to win concessions from French labor
Five months after telling voters he will slash France's 12.5% jobless rate--and the French workweek--Prime Minister Lionel Jospin is facing up to the problems his own promises may cause. His controversial proposal to create jobs by putting France on a 35-hour workweek has kicked off a national debate. So Jospin is inviting labor, industry, and government to the bargaining table.
Jospin is hoping to work out a crucial compromise: In exchange for cutting four hours out of the workweek, he wants to wring both wage reductions and greater flexibility from the French labor market. Such a deal would be less onerous for employers, and it's also politically key for Jospin. Says Etienne Schweisguth, research director at the Center for the Study of French Politics in Paris: "If [Jospin] succeeds, he saves the Socialist Party. If not, unemployment will rise, and radical right parties like the National Front will, too."
BALANCING ACT. Jospin knows that a blanket workweek reduction without pay cuts would backfire. It would cause employers to transfer even more jobs outside France and hurt the country's fragile economic recovery. But Jospin is betting that if companies are allowed to negotiate their own quid pro quo for a shorter workweek, such as salary reductions and longer hours during peak production periods, they may go along with the plan. It's a delicate balancing act between leftist rhetoric and centrist political intentions. "We want to encourage negotiation, not force companies" to implement a 35-hour workweek, says Olivier Davanne, an economist in the Labor Ministry.
The French Employers Assn., the Patronat, says it is willing to discuss shorter working hours in exchange for productivity-enhancing measures. One idea would be to annualize workweek hours. That would allow companies to deploy workers 45 hours a week, say, in peak production periods and 20 during slack periods--as long as the average is 35 hours. Some private companies in France have already negotiated such arrangements, since they are free to cut their own deals with workers as long as they observe national law. French employees at pharmaceutical giant Rhine-Poulenc, for example, work between 30 and 35 hours a week in exchange for tailoring their hours to production needs. "The workers in my company understand issues of global competitiveness," says Jean-Rene Fourtou, chairman of Rhine-Poulenc.
But such trade-offs between shorter working hours and productivity gains alone won't provide the kind of job growth French voters are expecting. To bring unemployment below 10% over the next two years, Jospin must encourage the creation of some 2 million jobs. Such dramatic job gains will require bold steps. The government would likely have to modify laws that give workers recourse to challenge collective layoffs. Such lawsuits often succeed in forcing companies to rehire workers or make costly settlements. As a result, French companies are extremely cautious about creating new jobs.
Allowing more part-time work would help, too. "If France had the rate of part-time workers that Holland has, roughly 29% of the workforce vs. 12% in France, the country's unemployment problem would be solved," says Fourtou.
PRODUCTIVITY PIT. While he plunges into talks with unions and employers, Jospin has yet to face up to another problem. Shorter workweeks have killed rather than created jobs in neighboring Germany. There, union IG Metall secured a 35-hour workweek in 1995 for some 3.5 million industrial workers. But the country's manufacturing sector continues to lose hundreds of thousands of jobs a year.
German auto maker Volkswagen, often trumpeted by the French leftist press as a successful example of the shorter workweek, is no model either. In 1994, VW reduced hours at its main German assembly plants from 36 to 28.5 to avoid laying off 30,000 excess workers. Now, wage costs are 8% higher than at several VW plants where employees work 35 hours per week or more. The short week is one reason VW operates some of Europe's least productive auto plants.
Jospin's strategy will pay off if the public debate he galvanizes pulls the party's ideological wing close to the center. It must also filter down to a population still hostile to the realities of the global economy. That won't happen overnight. Indeed, Jospin may be forced to act on the 35-hour week before he can swing enough popular support behind the "bold and daring" measures he has called for. The prime minister's dilemma over labor may only get worse.By Gail Edmondson, with Marsha Johnston, in ParisReturn to top