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Last Updated: Monday, 26 July, 2004, 05:46 GMT 06:46 UK
Why Europe votes for workers' playtime
By James Arnold
BBC News Online business reporter

Protests at the DaimlerChrysler factory

As the summer heat increases, so the thoughts of Europeans turn to leisure.

But in France and Germany at least, the talk is all of working harder.

Working-time regulations - enforced with varying degrees of rigour around the EU - are at the heart of European social policy. But over the past few weeks, that achievement has come under deadly assault.

A host of factory owners - Renault, Siemens, Bosch, DaimlerChrysler - are pushing to relax rules that limit most staff to a 35-hour week, and threatening to take their business elsewhere.

Politicians, including some on the left, are increasingly calling for liberalisation. And trade unions - even hardliners such as Germany's mighty IG Metall - seem willing to compromise.

Ups and downs

No wonder: many experts agree that working-time restrictions have failed in their basic objectives.

EU unemployment
The most zealous fans of the 35-hour week argue that hundreds of thousands of jobs have been created.

But a glance at the unemployment figures disproves that - or at least shows that other jobs are being destroyed just as quickly.

And while public-sector payrolls have grown in France and Germany, this is something their cash-strapped governments can barely afford.

Like it or lump it

There are broader concerns.

Working hours
The idea of restricting working hours is based on what economists call the "lump of work" fallacy - the idea that there is a fixed amount of activity in the economy which can be chopped up into smaller pieces, creating jobs.

In fact, there is no such correlation. Over the past 30 years, the average working week in France and Germany has contracted by about one-fifth, while unemployment has, if anything, risen; in the US, employment has increased despite a sharp expansion in working hours.

Indeed, some analysts argue that restricting working time only constricts an economy's potential for growth - scarcely good news for sluggish Europe.

The 50bn-euro question

This is because companies are at liberty to shift jobs overseas, a right frequently exercised by European employers.

Nicolas Sarkozy
Mr Sarkozy knows what the problem is
Companies can, of course, come to terms with working-time rules, but they resent any further bureaucratic burden.

In France, where the 35-hour week has been imposed most strictly, employers' organisation Medef calculates the policy has cost the economy 50bn euros (33bn; $61bn), plus 15bn euros in direct outlay from the public purse.

"French businesses labour under a unique handicap," Medef says.

"Along with the euro and slowing growth, companies are under unbearable competitive pressure."

Nicolas Sarkozy, the French Finance Minister and a likely candidate for even higher office, feels the same.

"We simply have to accept that those who want to work longer to earn more should be allowed to do it," he says.

Choose life

Not everyone agrees.

Working-time restrictions are still popular: a recent poll in newspaper Die Welt found 62% of Germans still convinced that the policy would create more jobs.

EU productivity
And although the "lump of work" is demonstrably a fallacy, its opposite is not necessarily true.

True, Europe's gross domestic product per head is some 30% below that in the United States.

But Europe's economy is not significantly less productive - many European economies produce far more per hour than the supposedly slick US.

Overall, about half Europe's GDP-per-head deficit is accounted for by shorter working hours, with much of the rest resulting from the EU's proportionately smaller workforces - in other words, largely the result of cultural factors and conscious life choices.

Working smarter, not harder

In any case, much of the focus on EU legislation may be misplaced.

Spanish beach
Flexitime in action
Working time rules have not, in fact, had a huge effect on Europe's habits: the average working week has only shrunk by half an hour since 1997, despite a barrage of legislation.

Even in France, only one in five workers is below the 35-hour ceiling; the average week for full-timers - well below the European average - is still about 40 hours.

At the same time, part-time and casual working - which can suit both employer and employee - is rapidly on the rise. One-fifth of workers are on flexitime.

And while EU rules have been fairly toothless, abolishing them is not going to turn Europe into a continent of workaholics - especially when the sun's shining.

French bosses slam 35-hour week
20 Jul 04  |  Business
Scrap 35-hour week, Sarkozy says
23 Jun 04  |  Business
French economy sees strong growth
12 May 04  |  Business
France's workplace revolution
12 Mar 02  |  Europe

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