International Business: France
Busting the French--for Working Hard
A crackdown by the labor cops has companies outraged
France thinks its executives work too hard. On Apr. 12, Bernard Rocquemont, former chief executive of radar manufacturer Thomson-RCM, was threatened in court with a $16,700 fine and imprisonment because a group of managers he supervised was found to have worked more than the legal weekly maximum. The same day, a French tribunal fined six directors of retailing giant Carrefour $4,166 each for refusing to turn over records of managers' working hours.
The crackdown on management overtime by France's labor police could get even tougher next year. In 1998, Prime Minister Lionel Jospin's government passed a law slashing the workweek to 35 hours from 39 beginning Jan. 1, 2000. Intended to create jobs for factory workers, the law could now be applied to middle managers, software developers, engineers, and other skilled workers. If implemented broadly, it could severely undermine France's competitiveness (table).
French and foreign companies alike are distraught about the new law. More than 70% of France's 14.7 million private-sector jobs are knowledge-based or in services. Manufacturers can try to offset a shorter workweek with greater production flexibility. But software writers, biotech companies, and other research-based businesses would see their productivity wither under a rigid application of the limit. "Measuring the amount of time in the office is totally outdated," fumes Ernest-Antoine Selliere, president of the French employers' association and a champion of entrepreneurship in France.AMERICAN PRESSURE. How stringently the 35-hour workweek is enforced depends on the National Assembly, which in July will begin considering a second law that details how the first will be applied. The American Chamber of Commerce has repeatedly warned French officials that rigid application could affect future investment. As France's No. 1 investor, the U.S. created more than 8,000 jobs last year, and some 1.6 million French jobs depend directly on U.S. companies. Ultimately, that reliance could carry the day. "I have the impression they are listening," says Stephen B. Pierce, managing director of the American Chamber of Commerce in Paris.
But Jospin may make an ideological concession to the far left to hold together a woolly government coalition of Socialists, Communists, and Greens. In general, things have gotten worse for entrepreneurs in France since Jospin took office, with rising taxes and foot-dragging on stock-option compensation. French press reports estimate capital flight since December, 1996, at $100 billion.
Employers' associations are now lobbying for a total exemption from the 35-hour limit for a certain number of top managers, plus the ability to negotiate flexible agreements on overtime compensation for other employees. "This law is going to need a lot of adaptation to avoid an impact on growth," says Selliere. That's one way Jospin could tame the monster he has created.By Gail Edmondson in ParisReturn to top
The Costs of a Shorter Workweek
-- Makes France's skilled workers more expensive
-- Worsens unemployment and undercuts growth by discouraging investment
-- Accelerates the flight of capital and talent to other countries
-- Strains the French budget by subsidizing companies that hire while shortening the workweek
DATA: BUSINESS WEEKReturn to top