France and the 35-hour week. Change on the way?

The notorious 35-hour week is coming under increasing attack

NOT since nationalisation in the early 1980s has a single policy so embodied French wrong-headedness. The 35-hour week, brought in by the Socialists in 2000-02, cut the maximum working week by four hours with no loss of pay. It was meant to create jobs. What has it actually done?

Three points stand out. First, big companies have coped better than small ones, for whom the rules have been eased. But even big firms feel that any benefits have worn off. Renault secured flexible working practices - weekend shifts, night work - in return for a shorter week; Caterpillar, a big American firm, moved to seven-day working. But four years on, the complaint is that the policy has destroyed the work ethic and damaged productivity. Insee, a statistics body, says it cut output per head by 5% between 1999 and 2002.

In labour-intensive services, the 35-hour week has brought mayhem as well as extra costs. A French bank boss calls it an “immense folly”. It is not just the 25% overtime pay for hours worked over 35, rising to 50% above 44 hours; it is also productivity lost to absences. In return for not having a 35-hour week, “autonomous executives” get ten or more extra paid days off a year. Short weeks make projects unmanageable. “It's like working with a permanent team of part-timers,” complains one insurance boss. He cites a colleague who refused a promotion because he would lose extra days off. Oddly, absenteeism has also risen.

Second, the 35-hour week has created a two-tier labour market. Its chief beneficiaries are not workers, whose pay has been frozen for two or three years. Rather it is the autonomous executives, with their extra days off. And thanks to broader labour-market rigidities employers are using short-term or temporary contracts to gain flexibility. By 2002, some 22% of those under 25 worked on such contracts, up from 13% in 1992.

Third, the promise of job creation was empty. Martine Aubry, architect of the 35-hour week, says it “created 450,000 jobs”. Certainly, the public sector had to create many, at heavy cost. Yet the policy came when the economy was buoyant. The government cut employers' social charges, which would have created more jobs anyway. And France's jobless rate is still nearly 10% - twice that in Britain - and 22% for under-25s.

Is all this sinking in? A poll in Le Parisien suggests that 51% favour reforming the 35-hour week - if they can earn more. Bosch is negotiating a 36-hour week at its plant near Lyons. Nicolas Sarkozy, the finance minister, is pushing for reform. It may not mean the death of the 35-hour week, which unions would resist. But the wisdom of forgoing higher pay for more free time is being questioned.

The notorious 35-hour week is coming under increasing attack.

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