South-Western College Publishing - Economics  
Where Shorter May Be Better…The French Work Week
Subject Productivity and Growth
Topic International Finance
Key Words Productivity, Economic Growth
News Story

Sixteen months ago, at the urging of Prime Minister Lionel Jospin, France passed a law to reduce the French work week to 35 hours, from its current level of 39 hours, without any reduction in pay. This plan was pushed as a remedy for France's 12 percent unemployment rate. Business leaders were against the plan and warned that it would cripple the French economy. Labor, as expected, was an early advocate of the measure. France is still in the process of implementing the new law; however, the experience so far has led to some changes in position - more businesses are supporting the measure while some unions have argued against it. The reason for the reversal is that the shorter workweek has caused business firms to overhaul their work environment, reorganizing production, changing work shifts, eliminating surplus positions and benefiting from the improved productivity and flexibility.

Jospin's policy was designed to create jobs. The prevailing theory was that reducing the work week with the same level of production would increase the demand for workers. The law is complicated and the transition is to be carried out in stages. The year 2002 is the deadline for all firms with 20 or more employees. So far there is little evidence that a significant number of additional jobs have been created. It is difficult to estimate the impact of the program, since the government has also aided the transition with business tax cuts and other incentives. On average, a worker in France, who had one of the shorter workweeks even before the reduction to 35 hours per week, works 1,656 hours per year. This compares with an average U.S. worker's 1,966 hours per year, or Japan's 1,889, but, it is still higher than Germany's 1,574. The hourly cost of a production worker in manufacturing is $17.97 in France, $18.24 in the United States and $28.28 in Germany.

(Updated December 1, 1999)

1. What is labor productivity? How is it measured?
2. What are the two primary sources of change to labor productivity?
3. A number of businessmen were afraid that the added expense resulting from an increase in the hourly cost per worker would either result in their having to raise prices or go out of business. Instead, a number of found that the push to a 35-hour week has caused them to reevaluate their production schedules and methods and introduce productivity-enhancing measures. Explain how reorganization or productivity improvements could offset the added cost per worker.
Source Suzanne Daley, "A French Paradox at Work;" The New York Times, November 11, 1999

Return to the International Finance Index

©1998  South-Western College Publishing.  All Rights Reserved   webmaster  |   DISCLAIMER