France's Economic Growth Hampered by 35-Hour Work Week

| by Diana Kruzman
French President Francois Hollande.French President Francois Hollande.

According to French President Francois Hollande, France is in "a state of economic and social emergency," despite enjoying a 35-hour work week lauded as a worker-friendly reform in an overworked country. But France’s economic situation points to this law as more of a hindrance than a boon.

On Jan. 18, Hollande announced a set of new government policies aimed at revitalizing France’s sluggish economy. The $2.2 billion plan funds new training opportunities and apprenticeships and incentivizes businesses to hire young workers; companies with less than 250 workers will be paid $2,175 for every new employment contract lasting longer than six months.

The move, fueled by economic stagnation and an inflexible job market, comes as France’s unemployment rate rises to 10.6 percent, the highest it’s been in 18 years. Unemployment is particularly high among young people, a result of regulations that protect long-term employees and discourage new hires.

The irony lies in the fact that 16 years ago, a visionary economic policy was introduced to tackle the kind of chronic unemployment France is experiencing today: the 35-hour work week.

The law, which came into effect under former Prime Minister Lionel Jospin in 2000, restricted employers from working each employee for more than 35 hours per week, below the EU average of 41.5 hours.

Hailed as a humane solution to an overworked populace -- as well as an incentive for businesses to hire more workers by spreading out work among many employees -- the measure enjoyed widespread support from working-class French citizens as well as Socialist politicians.

Sixteen years later, France’s economy is in worse shape than ever -- and the 35-hour work week is a major part of the problem. Although it was created to encourage companies to increase hiring, so many companies have applied to exempt themselves from the policy that the average French citizen actually works 40.5 hours -- meaning that the law has failed to achieve its goal of reducing working time for overworked professionals. At the same time, it has hampered employment for companies who find it easier to hire temporary workers than increase their full-time staff.

Unemployment figures in France point to a growing sector of unemployed youth and worsening economic conditions. Over time, restrictions on working hours hurt businesses that can’t afford to hire more workers, shrinking the job market overall. France’s economy would benefit from the type of deregulation that puts working-hour decisions in the hands of the businesses and employees themselves.

And lifting the 35-hour work restriction doesn’t have to spell the end of worker-friendly policy; instead, it allows labor unions to negotiate in favor of their workers, as many have done even among businesses who have exempted themselves from the national working hour restriction.

Hollande promised his labor reforms wouldn’t "put into question" the 35-hour workweek; the problem is that to enact change within the country’s economy, he needs to.

Sources: Chicago Tribune, Deutsche Welle, Bloomberg (2), Eurostat, The Telegraph, The Local / Photo credit: Jean-Marc Ayrault/Flickr