Commentary: Give This Employment Policy The Guillotine
French public officials can sometimes display a refreshing honesty. That was the case in early October, when Budget Minister Alain Lambert did the political equivalent of telling the emperor he had no clothes. Speaking to the French Parliament, Lambert expressed his real feelings about the country's four-year-old law reducing the workweek to 35 hours.
Not only has it been costing the French economy $17 billion a year, he said, but the law is also a key reason why France has underperformed so spectacularly over the past few years. "All French people think the 35-hour [week] is an economic mistake,"said Lambert.
Indeed, it is hard to think of a worse piece of social experimentation in postwar Europe. France's 35-hour-week legislation, the main electoral plank of a center-left that stumbled back into power in 1997, swam against the tide of history. It minutely regulated the workplace just as other countries were deregulating it, and it decreased the number of working hours just as average working time in the industrialized world was inching up. Now the French work fewer hours than just about anyone in the developed world, and 24% less on average than workers in the U.S. The law also saddled businesses with competition-eroding extra costs: Productivity was dented by requiring employers to keep paying workers the same salaries while cutting their hours. Lambert is right: It's a lousy law. France should repeal it.
Candor is one thing; action is another. Don't expect the center-right French government to do much about the law. Even though Lambert's criticism seemed to inject some common sense into the debate, Paris has been backtracking as fast as it can. Prime Minister Jean-Pierre Raffarin let on that, well, there was no question of actually repealing the legislation. The Finance Ministry announced that the real costs of the law were not as bad as all that, about $12 billion a year -- give or take a billion. No matter that polls show that 54% of the French don't particularly like the law, even if it gives them plenty of four-day weekends. Because of mounting discontent with his policies, the last thing Raffarin wants is a protracted fight with French unions that could jeopardize other parts of his program, such as overhauling health care.
Quel dommage. The 35-hour law sent a powerfully negative message that France was no longer interested in things like growth, prosperity, and dynamism. It was based on the misguided assumption that the amount of work was finite, sharing it would reduce unemployment. Not only is real life very different -- most French companies haven't hired more -- but the logic was itself defeatist, assuming the French economy would never again experience growth. Worst of all, says Jean-Paul Pollin, a leading French economist, the 35-hour week "instilled the idea that work itself is the enemy, and the less you do, the better. It has been catastrophic in that respect, an historic error."
True, there were some beneficiaries. Giants such as Renault and Michelin benefited from a provision of the 35-hour legislation allowing more flexible shifts. That's one reason why the powerful French employers' federation, Medef, is opposed to repealing the legislation.
But workplace flexibility could have been achieved in other, less costly ways. Besides, the extension of the 35-hour week to the public sector has led to a perceptible degradation in service. That's particularly true in France's once-vaunted health-care system: Doctors work 20% less, on average. Staff shortages in hospitals and nursing homes due to the 35-hour week was a key reason August's heat wave killed 14,000 in France.
Lambert's admission could have been the moment when France's leaders signaled that the country was changing direction. German Chancellor Gerhard Schröder has been much more forthright about the need to become more economically competitive, and the Bundestag is to vote Oct. 17 on a package of economic reforms. In opening up the discussion about the 35-hour week -- and then doing nothing about it -- France could be blowing another chance for serious reform.
By John Rossant