Labor Pains

in Paris

France has come up with a novel way to reduce unemployment: Shorten the workweek.

A year-old law cuts the average workweek from 39 hours to 35 hours for virtually all workers in France. (A handful of top executives are exempt.) Those who work more than the prescribed number of hours will get longer vacations—in a country where a cushy five weeks is the norm.

When Socialist Prime Minister Lionel Jospin enacted the law in January 2000, France’s executive class was terrified of adding workers to their payrolls. But now that the law is being enforced after a yearlong grace period, the restriction hasn’t been disastrous for employers, at least not yet. In fact, the law has been something of a boon to some businesses because it gives employers greater discretion over when their employees work.

Consider the case of Wanadoo, France’s largest Internet portal with 6,500 employees worldwide. Philippe Sanglier, assistant director of human resources, says the firm has seen a dramatic increase in productivity from individual workers since it started to comply with the law last year. Wanadoo’s salaried employees are now getting an extra 10 to 18 days off a year. But they’re still getting their work done. And despite the intent of the law, Wanadoo has not hired any new employees.

That’s not true of every company: The labor ministry says 150,000 new jobs have been created so far, out of a workforce of 24 million. The unemployment rate in France now stands at about 9 percent, low by historical standards but still twice the 4.2 percent in the United States and much higher than Britain’s 3.5 percent. The French law is much more ambitious than those in countries such as Germany that have 35-hour workweeks for only union workers. In the U.S., only hourly workers keep to a 40-hour workweek.

Disneyland Paris is one company that has added workers in compliance with the law. Since January 2000, its workforce has climbed by about 10 percent to 11,500 employees, and the park now stays open two hours later.

But that is the exception among U.S. companies in France. Sixty percent of companies have not added to their payrolls in France, according to a survey of 98 firms conducted by the American Chamber of Commerce in Paris. In general, U.S. firms, which employ 450,000 people in France, say the 35-hour workweek is not having as negative an impact as expected.

One category will certainly suffer under the guidelines: companies that run on a skeleton staff. That includes many startups, which have no bench strength and can’t spare people for several weeks at a time as required by law. “If we do implement it, we are completely screwed,” says Samuel Katan, co-founder and director of marketing at Paris-based online advertising agency Chewing Com.

Some companies already are considering fleeing from the law. Netonomy, for example, a Paris software firm with 75 employees, may relocate senior managers and some programmers abroad so it doesn’t have to give them additional vacation, according to Phil Dean, director of finance.

For now, Netonomy and other tech startups are keeping their fingers crossed that French labor inspectors will let them slide on the 35-hour workweek. A spokeswoman for France’s Employment and Solidarity Ministry is coy about whether that will happen but says officials rarely conduct random company inspections. Rather, firms usually get busted when an employee rats them out.

_______________________

“Labor Pains in Paris,” The Industry Standard, March 12, 2001 issue, page 84. Author: Kristi Essick, Paris.