A bout of European soul-searching
over working hours is attracting little
sympathy in the United States. "Bonetired?
You need a job in Europe, suggests
the Los Angeles Times. "Memo to
Germany: get to work thunders Forbes
magazine.
A little New World smugness is understandable.
For decades, and especially
during the 1980s, Europeans achieved a
standard of living as good as or better
than America's, while apparently working
far less hard. Now, this alchemy is
going into reverse. Amid slack economic
growth and persistently high unemployment,
Europe is threatening to fall decisively
behind the United States. For
policy makers on both sides of the Atlantic,
the prescription seems clear: more
work and less play.
If only it were that simple. Constraints
on working hours have been a
European fetish for at least 200 years ø
ever since the ghastly conditions of early
industry attracted the attention of philanthropists.
"Eight hours' daily labor is
enough for any human being, and sufficient
to affordÉ the necessaries and
comforts of life, wrote British industrialist-
turned-proto-socialist Robert Owen
in 1833. "For the remainder of his time,
every person is entitled to education,
recreation and sleep. Karl Marx held
that six hours' daily labor was sufficient
to sustain a worker; more than that
served only to line the boss's pocket.
These days, even Marx's six hours
look a bit of a stretch. Since 1970, the
workweek in France and Germany has
shrunk by about one fifth; in the United
States, working hours have expanded by the same amount over the same period.
In 2003, Americans worked on average
1,793 hours, some 350 more than the
West European average. According to the
European Commission, a French employee
spends only five hours of the day
working; in the United States, the equivalent
figure is 7.6 hours.
Europe's gentle approach to work is
enshrined in law. In 1993, the European
Union's Working Time Directive introduced
a long list of restrictions to protect
workers against "excessively long
hours, inadequate rest and disruptive
work patterns". In practice, the directive
did little more than set a 48-hour maximum
working week, and Britain secured
a limited exemption. But France and
Germany have gone much farther: both
have 35-hour weeks ø France as the result
of a 2001 law, and Germany through
collective bargaining with trade unions.
None of this would matter greatly if
the economic sums were still running
Europe's way. But they are not. For much
of the last quarter of the 20th century,
European workers were clearly more
productive than their American counterparts;
in the early 1990s, output per
worker was as high across Europe as in
the United States, and far higher when
measured per hour worked.
Now, however, only France, Germany,
Belgium and the Netherlands outpace
the United States per hour. Per
worker, German economic output is less
than three-quarters of the U.S. level. And
European manufacturing wages have
risen by half since 1979, almost double
the rate in the United States. In other
words, whatever slender productivity advantage
Europe may have left is no
longer sufficient to buy it a shorter
working day.
This competitive crunch is being
blamed as a major cause of the lackluster condition of Europe's economy. Since
the mid-1990s, EU economic growth has
averaged just 2.1 percent a year, compared
with 3.3 percent in the United
States. Some 19 million West European
workers out of a total of 193 million are
now out of a job ø including 4.4 million
in Germany alone.
Reform is in the air. In September,
Brussels tinkered with the Working Time
Directive, extending Britain's opt-out,
and granting some similar privileges to
other member states. Far more bitter,
however, is the struggle over the 35-hour
week. In France, supporters of the measure
say it could create 350,000 new jobs,
mainly by sharing available work more
widely.
In fact, however, a French parliamentary
committee found in April 2004
that the 35-hour week had had no net effect
on employment. Official jobless figures
have certainly not fallen. MEDEF,
the country's employers' federation,
reckons the policy has burdened the
French economy with Þ50bn in additional
costs to the private sector, as well
as Þ15bn in government subsidies to
companies to ease the introduction of
the shorter week. The current centerright
government, elected a year after the
35-hour legislation was enacted, has already
started to punch holes in it. The
government, for example, has accepted
the principle - not previously enshrined
in the legislation - that the 35-hour limit
can be breached if there is a collective
workplace agreement. The departure
from the government of Finance Minister
Nicolas Sarkozy has, however, stalled
official moves to scrap the law entirely.
Meanwhile, employers are taking the
initiative as a string of mainly multinational
companies has started negotiating
limit-busting arrangements with labor
unions. Workers at two Siemens cell phone plants in Germany voted to increase
their hours to 40 a week ø with no
extra pay ø to prevent their jobs being
exported to Hungary. In France, autoparts
maker Robert Bosch guaranteed
jobs would not be moved to the Czech
Republic in return for workers giving up
their 35-hour week. Some of Europe's
biggest employers, including German
auto makers Volkswagen and Opel, and
Britain's government-run National
Health Service, are similarly gearing up
to challenge working time restrictions.
None of this has technically sundered
the letter or spirit of Europe's
working time rules. The Robert Bosch
agreement, for example, was well within
the margin of flexibility that French law
allows. The question for Europe's worried
workers is whether the consensus
will rupture further ø and, if so, whether
the inevitable result will be U.S.-style
working hours.
There are sound reasons for expecting
that it will not be. For one thing, Europe's
labor market is far more complex
than it first appears. At least part of the
apparent slacking-off since 1970 is the
result of a big increase in part-time
work, which has become far more common
in Europe than in the United States.
In the Netherlands, for example, more
than one third of the workforce is employed
part-time, compared with 13 percent
of Americans. One in five of all
European workers is on some sort of
flextime.
It also turns out that Europe's restrictions
on working hours mean far
less in practice than they threaten on
paper. Only one in five French workers
does less than the 35 hours mandated by
law - and since 1997, the average European
working week has shrunk by less
than half an hour, from 40.5 to 40 hours,
despite an avalanche of legislation. Employment
growth has tended to be
higher in service industries where employers
like flexible staffing arrangements,
while old-style manufacturing,
governed by shifts, is on the decline.
Another wild card is the likely impact
of EU enlargement. At a casual
glance, the ten new members of the
Union look admirably workaholic: Poles
and Czechs work longer hours even than
Americans. And the new members have
tended to back British demands for optouts
from working time rules.
In reality, however, the labor market
in Central and Eastern Europe bears little
resemblance to that of the United
States. Unemployment among the new
member states, at about 15 percent, is almost
double the rate among the 15
countries that made up the European
Union until its expansion in May 2004.
In Poland, fewer than half of all working-
age adults have a job, against an EU
average of two thirds. Labor unions,
whose influence has been minimal over
the past decade, are on the ascendant.
And the region's governments seem predisposed
to interventionist labor market
policies.
Poland already spends a greater proportion
of its national wealth on social
security than Germany. "Central Europe
isn't an expensive place to employ people
yet, but it's getting to be a troublesome
one, says the head of one U.S. multinational
company's Czech operations.
"We're not betting on it getting easier.
Second-guessing the swerves of EU
labor market policy after enlargement is
not easy. But there seems to be some
truth to the widely held belief that cultural
factors will prevent Europe working
harder. Much ink has been spilled in
pursuit of the theory that present-day
Europeans are not inclined to hard work.
Their values, the theory goes, are rooted in hearth and home, in leisurely hours
spent in restaurant or garden, at the
beach or on mountain top. Americans,
by contrast, are said to be close enough
to their pioneering roots, and to the Puritan
ethic, still to cherish the value of
honest toil.
There is a limit to the value of such
generalizations. But there is concrete evidence
of fundamental differences in
working practices. In a paper published
the National Bureau of Economic Research
in 2000, Linda Bell and Richard
Freeman argued that differences in
working time arose from variations in
income inequality. In the United States,
workers who put in more hours get pay
raises; on average, a 2,000-hour-per-year
worker who puts in an extra 200 hours
increases his or her net hourly wage in
future years by one percent.
In Germany, the correlation between
effort and reward is far less clear-cut,
mainly because German employers are
less likely to value hard work and reward
it accordingly. Working 20 percent
harder than your fellow workers will not
necessarily make you 20 percent richer.
In short, expectations are different:
American workers expect their hard
work will eventually pay off; Germans
doubt it is worth the effort.
If true, this is an obvious reason why
American workers are still more willing
to put in unpaid overtime than Europeans,
despite their much tougher working
day. It also makes a stark point for
Europe's policy makers. Changing the
continent's working habits will require a
fundamental shift in employer-employee
relations, not just a reform of legislation.
Europe needs a profound change in
the internal culture of its companies. An
international survey in 1997 found that
49 percent of U.S. workers thought quality
of work should determine pay, compared
with 38 percent of German workers.
The survey also found that 31 percent
of American workers believed they
had opportunities for advancement,
against only 19 percent in Germany.
Differences in economic conditions
notwithstanding, it seems clear that the
incentive model works less clearly in Europe.
If they want Europeans to work
more hours, companies must not only
pay more but also let workers know that
their efforts will be seen and rewarded.
There is not much that governments can
do about this. Without the offer of
greater rewards, any call for more work
means just one thing: less play.
James Arnold reports on international business
and economics for BBC News Online, after
stints as a correspondent in Vienna and
Moscow.
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