The French Cut Back on Work in Hopes of Slimming Down the Jobless Figure

A new law aimed at reducing France's 11.3% jobless rate mandates that companies must cut their workweeks to 35 hours from 39.
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The French love their

Gauloises

cigarettes, and many of the country's workers may soon find they have more time on their hands to smoke them.

France's socialist government isn't trying to promote smoking, but it kicked off a debate in Parliament on Tuesday over implementing a law passed last year by Prime Minister

Lionel Jospin's

coalition of socialists, greens and communists that will, in effect, give gainfully employed French men and women more time off to stand around puffing.

This law mandates that companies must cut the workweek to 35 hours from 39 in the hope that it will create work for the 11.3% of the population that is currently jobless. Companies with over 20 workers will be required to cut working hours starting this January, and smaller firms will have to follow suit starting in 2002.

Needless to say, the law has sparked angry protests from employers, counterdemonstrations by supportive unions and bemused head-shaking by economists, who know that such a law will likely do little to fix France's woeful employment situation and suspect it may actually make matters worse.

Despite the country's double-digit unemployment rate, French policymakers are quite pleased with the way the economy has been shaping up this year. Growth, expected at 2.3%, will outstrip the other major economy of the Euro bloc, Germany. The government has also made a pre-emptive strike at critics of the workweek law. Labor Minister Martine Aubry calls the law "the miracle of the Seine" and claims over 100,000 jobs have been created by companies already complying with the

Brezhnev

-like measure.

Gallic bluster notwithstanding, many observers expect that after the current tumult dies down, the law will stay pretty much the way it is. "You have to go through with it for political expediency," says David Brickman, an economist for

PaineWebber International

in London. And because unions are moderating wage demands in order to ease the introduction of 35-hour workweek legislation, France may even "benefit from wage restraint in the short term," he says.

However, this is no sure thing, and some economists are concerned that, down the road, France's competitiveness with other countries may suffer, hampered as it will be by the administration's make-work legislation of today.

"Looking ahead, you could definitely see this damaging competitiveness," warns Brickman.

Critics of the law say the jobs that the labor minister is talking about would have been created anyway as the economy continues to improve. The real harm from the law will come when conditions are no longer favorable and firms will still be hamstrung by the legislation. Forced to pay employees the same wages for less work, companies will have to search for ways to make up for declining productivity. One method could be through capital improvements that require less labor -- i.e., workers and jobs.

Instead of merely attempting to divide up the current work available and make the taxpayers subsidize the costs, it would be more logical for the government to try to increase the total size to the economic pie, by slashing regulations and increasing labor-market flexibility. That, however, appears unlikely to happen, as Jospin has recently found himself on the defensive from the hard left among his own ranks.

The prime minister was hammered by his socialist and communist critics for his tepid first reaction to news last month that tire giant

Michelin

was axing 7,500 workers even though the company reported that its first-half profits surged.

Since then, Jospin has attempted to prove he is true to his left-wing roots by taking a harder line against companies that lay off employees or make use of temporary work contracts to avoid labor regulations. Such proposals are unlikely to help France's unemployment rate come down either.

Yet there is one company that can take solace from the current state of affairs. The makers of Gauloises know that jobless benefits buy their cigarettes as readily as any paycheck does, and the unemployed will have extra time to smoke more of them.