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Monday, July 2, 2001
French success has economists wondering
By GWYNNE DYER
LONDON -- For Americans who work long hours, get only two weeks holiday a year, and live under a system that defines job security as a socialist vice, the apparent success of the French experiment is a puzzle and an affront.
For Japanese, who work even longer hours, don't dare to take even the miserable ration of holidays they are entitled to, and are dismantling their old system of lifetime jobs, it is as alien as the work patterns of the Ottoman seraglio.
But it seems to be working.
Three years ago, Martine Aubry, then employment minister in the French government, sponsored a law that reduced the working week in France from 39 hours to 35 hours -- with no corresponding cut in wages. All the orthodox economists predicted that it would wreck French competitiveness, discourage foreign investment and destroy jobs.
President Jacques Chirac, a rightwing politician compelled to "cohabit" with a leftwing parliamentary majority, condemned Aubry's law as "ideologically obsolete." She pushed the law through anyway, and it has already been applied to 6 million employees of larger French companies. There will be little opposition when the law is extended to firms employing less than 20 people next year, for the economy is doing just fine.
The French economy has grown at a healthy rate every year since the present center-left government led by Prime Minister Lionel Jospin came to power in 1997, and France is second only to Britain among European countries in attracting foreign investors. As for the key issue of creating new jobs (Aubry's main motive for cutting the working week), France's unemployment rate has come down from 12.6 percent in 1997 to 8.5 percent now.
This flies in the face of what the French would call "Anglo-Saxon" economic wisdom: the rightwing consensus, ushered in by President Ronald Reagan in the United States and Prime Minister Margaret Thatcher in Britain in the 1980s, which holds that in economic matters, less is more. Less regulation and lower taxes, the English-speakers agree, are the secret to higher profits and faster growth and thus -- in the "horse-and-sparrow" theory of economics -- ultimately to higher employment and better wages even for the poor.
The horse-and-sparrow theory of economics is the argument that if you stuff enough hay into the capitalist horse, some of it will pass through undigested and plop into the street to feed the undeserving sparrows as well. Of course, they will also have to swallow quite a lot of . . . well, never mind, but you get the picture.
It's a theory that appeals mightily to those afflicted with what used to be called the "Protestant work ethic," and it is particularly beloved by those who want to justify enormous differences between the incomes of the rich and the poor on the grounds that only unregulated economies grow fast over the long term. And here come the French, determined to spoil the Anglo-Saxon party.
Nothing could be less Anglo-Saxon than cutting the work-week in order to spread the jobs around. To decree that people must go on earning the same amount for their 35-hour week -- or, to be strictly accurate, their 1,600-hour year -- as they used to get for a 39-hour week is state intervention with hobnailed boots. How annoying when it actually works.
France now has the lowest unemployment rate in 18 years, and Jospin's government claims that the shorter work week has helped to bring it down. Last year, for example, the French economy created about 500,000 new jobs, and supporters of the 35-hour week claim that it is responsible for around 280,000 of them.
It's not just spreading around the existing jobs, either. All that extra leisure time is creating a new demand for leisure services, from gyms to restaurants to do-it-yourself stores -- especially because so many people have used the new flexibility on hours to shift to a four-day working week.
The new flexibility may also help to explain France's recent big gains in productivity, for renegotiating the working hours has let many firms get rid of old restrictive practices. In return for fewer total hours per year, workers are open to new deals on weekend work, longer shifts, even working during the sacred month of August. And most importantly, two-thirds of the people on a shorter work-week (including an overwhelming majority of women workers) say that it has improved their lives.
Critics point out that the French economy has been growing fast, and unemployment falling, ever since the Jospin government came to office in 1997, though the work-week law can have had little direct impact until mid-1999. They also object that the subsidies the government gives to private companies to cover the costs of the switch add up to about $7,200 per new job per year. But every new worker will pay at least that much in taxes each year, reply the supporters of the policy -- and think of all the other benefits.
In a recent analysis of the French strategy, Charlotte Thorne of the Industrial Society, a British-based think tank, concludes that "despite breaking all the rules in the Anglo-Saxon economics text book, the French are winning their battle with unemployment." But she adds: "Britain is still in the mind-set that we have to work incredibly long hours. . . . Practically, there is no reason why we shouldn't have a 35-hour week here, but culturally we are a million miles away."
If Britain is a million miles away, then the United States is at least 10 million. As for Japan, we are talking light-years. These arguments aren't really about economics. They're about culture, values and belief.
Gwynne Dyer is a London-based independent journalist whose articles are published in 45 countries.