First 35-hour week law evaluated and second law outlined
In May 1999, France's Ministry for Employment and Solidarity published an initial progress report on the 1998 law on the 35-hour working week, aimed at fueling discussions on the second law on the issue, which is to be voted on by the end of 1999. On 21 June, Martine Aubry, the Minister concerned, publicly announced the principal outlines of the proposed second law. She plans a one-year transition period between the law being passed and its coming into effect, while her comments have triggered a debate on the legitimacy of the agreements on working time signed by minority trade unions.
On 20 May 1999, the Ministry of Employment and Solidarity published an assessment of progress so far under the legislation introducing the 35-hour working week, adopted in June 1998 (FR9806113F). The report covers the period from 13 June 1998 to 5 May 1999. The law provides for the introduction of a statutory 35-hour week from January 2000 (2002 for smaller companies) and encourages the social partners to negotiate on this issue at company and sector level before late 1999, when a second law will set out more detailed legal provisions on the new working time regime (FR9904173F), drawing on the outcomes of the negotiations. The main findings of the report are as follows.
The report first stresses the momentum that negotiations have picked up, stating that "almost one company out of two is involved in negotiations over the 35-hour week" and that "more than 4,000 agreements have been reached so far, covering over 1.1 million employees." Moreover, 5,750 "support for advice" (appui-conseil) agreements - state funding for companies to spend on outside consultants with a view to preparing for negotiations - have been signed, and the Ministry expected a large number of new agreements to be reached over the coming weeks. The quantity of agreements signed and of those in the pipeline testify to a far greater momentum than that generated by the implementation of the 1996 Robien law, which seeks to encourage working time reductions and reorganisation to create or save jobs (FR9705146F).
In nine out of 10 cases, the company agreements were signed by all the unions within the company. The rate of union endorsement is very high, ranging from 86.4% for CGT to 95.4% for CFDT. However, the report adds that in 60% of cases, the agreement was signed not by trade union representatives, but by employees "mandated" to do so by trade unions in companies where there is no union delegate or workforce delegate playing the role of a union delegate (FR9807123F).
According to the Ministry, sector-level bargaining - which has resulted in 69 agreements, covering 8 million employees - is noteworthy as it provides a framework for company negotiations. However, it cannot legislate on work organisation or specify the impact on employment. Only 32 of the sectoral agreements have been extended by the Minister of Employment and Solidarity, a process which is necessary for an agreement to be applicable to all companies in a sector, and if the agreement is to provide an exemption from existing regulations. The Minister has ruled out extending "those clauses of agreements without any basis in law or which run counter to the legal provisions", and has expressed reservations "on other points which will be dealt with in the second law".
The forms that the reduction of working hours has taken have generally varied from one company to another, and sometimes from one workshop or office to another within the same firm. The following methods can be identified:
- shorter working days;
- weekly reductions implemented by the day or half-day;
- alternating long and short working weeks
- days off taken over the year; and
- extra public holidays and days off linking weekends to public holidays.
In most cases, the reduction of weekly working hours has been accomplished on an annual basis, whether to respond to fluctuations in workload (seasonality and variations in demand), or to designate some days as days off, as a way of reducing working hours. For managerial and professional staff, most agreements generally provide for reductions to be expressed in extra days off (to be taken over the year), rather than hours cuts. As for part-time staff, the agreements "often propose a pro rata cut in hours with no corresponding drop in pay". The Ministry indicates however, that "many agreements also give these workers the option to work more hours, up to 35 in some cases, thus introducing genuine choice in the amount of time worked."
Impact on employment
Since 13 June 1998 (the date when the first law was passed) 56,767 jobs have been created or saved, out of more than 1.5 million employees covered by agreements signed. In three-quarters of the cases, jobs have been created, as part of "offensive" agreements, and the rest have been saved, as part of "defensive" agreements. Agreements backed by the incentive grants provided for under the law have created or saved 8% of the jobs concerned (to qualify for this funding, companies must undertake to create or save 6% of their total employment). Overall, "the average impact on employment has been 5%, and increased productivity has been of the order of 3%."
The Ministry states that the agreements have brought benefits for both employee and employers.
For employees, in 85% of agreements, pay has been maintained, very often with pay restraint to be introduced later. For employees paid the SMIC national minimum wage, existing pay levels have been maintained across the board. Employees have also gained increased flexibility, states the report: "for employees, the time that has been freed represents significant progress, all the more so as they can use it according to their needs and aspirations. Thus, the periods of notice to be given prior to a change in employees' work patterns have often been specified. Reconciling working hours with social, family and school timetables has increasingly become an issue in negotiations. Lastly, opinion polls carried out among employees record an 85% satisfaction rate. These respondents feel that 'the move to the 35-hour week has been a good thing for them personally'."
For employers, concludes the report, being able to taking account of fluctuations and any seasonal variations has enabled businesses to adapt themselves more closely to demand. Furthermore, the Ministry states that the measures in the June 1998 legislation have enabled a rise in unit labour costs to be avoided. The new or saved jobs has been funded in three ways: lower capital requirements due to more efficient use of facilities and a reduction in inventories; pay restraint or freezes, usually spread over two years, following the initial maintenance of pay levels; and the reductions in employers' social security contributions offered by the government.
Framework of the new law revealed
The MEDEF employers' confederation challenged the Ministry's progress report, considering it highly improbable, while trade unions offered little reaction. However, all unions and employers' associations entered a process of bilateral discussions with Martine Aubry, the Ministry of Employment and Solidarity, during May and June over the drafting of the second law on the 35-hour week, which has to be passed before the end of 1999 if its provisions are to come into effect by January 2000.
The Minister for Employment and Solidarity was due to send the social partners send a draft of the bill on the second law on 23 or 24 June. However, in an interview with the Le Monde newspaper published on 22 June 1999, she gave details on the overall framework of the coming bill. Its main points are as follows.
- Establishment of an"adjustment"period. The date when the 35-hour week comes into effect will remain unchanged (1 January 2000 for companies with more than 20 employees and 1 January 2002 for smaller businesses), but there will be a 12-month "adjustment" period (période d'adaptation), with a transitional system regulating the annual quota of overtime and the premium rate at which it is paid. The law will come into full force in 2001 (rather than 2000, as initially planned) for companies with more than 20 employees and in 2003 (rather than 2002) for the others. The minister explained this choice by stressing that "the 35-hour week will succeed through negotiation, and negotiation needs time: six to nine months, as the progress report shows. So I have suggested that 2000 should be a period of adjustment to make everyone more comfortable and broaden negotiations further."
- Overtime. During the adjustment period, the premium rate at which the first four hours of overtime are paid (from the 36th to the 39th of the week) will be set at 10%, with a rate of 25% for hours worked in excess of 39. Under the system which will apply from 2000, the rate for all overtime will be set at 25%. In 2000, the premium payments "could be paid into a fund" whose aim will be discussed by unions and employers (such as a higher level of insurance coverage for unemployed people or funding the cut in social security contributions). In the "final system", Martine Aubry would "like to see at least part of this 25% premium redistributed in the form of days off in lieu".
- Annual quota of overtime. This has not yet been specified for the transition period. However, in the final system, the current quota of 130 hours per year will be applied. "The pace at which this goal will be reached has to be decided upon first", was the only indication given by the minister. If hours worked are calculated on a 12-monthly basis, this quota is set to be reduced.
- SMIC minimum wage. A "double guarantee" will be given to workers earning the SMIC statutory minimum wage: their monthly pay "will not fall" when the 35-hour week comes into effect; and their monthly pay will rise "faster than the cost of living". There will not be an 11.4% increase in the hourly rate of the SMIC to compensate mathematically for the drop in working hours from 39 to 35 with no decrease in pay. Instead, people receiving the SMIC will thus be paid on the basis of 35 times the hourly rate of SMIC, and will be given a "top-up" payment, which will cover the difference between this sum and the current monthly rate of the SMIC.
- Managerial and professional staff. Working time will be counted in days rather than hours for certain managerial and professional staff. "Either a maximum number of days worked or a minimum number of days off" are to be set, though the minister has "not completely decided" her position on this matter. Three categories will be used: "top managers", not subject to the regulations governing the length of working time; "managers integrated in teams", who will continue to have the same hours as other employees; and, "in between these" categories, "managerial staff who work long hours and are paid a flat rate". The last-named group "will be able to take extra days or half-days off, which is not possible at the moment". The amount of extra days off provided for on average under the 35-hour week agreements signed so far is "between five and 10" per year.
- Part-time work. The law will use the "European norm", which defines every job involving work lasting less than the statutory length of the working week as part-time.
- Calculation of working hours over a 12-month period (annualisation). Three ways of varying hours around an average currently exist. Ms Aubry suggests that they be reduced to "just one", on the basis of the "agreements already signed" and with the establishment of periods of notice of changes in hours for staff affected.
- Training. This will continue to be carried out during working hours, "when an employee is training, at the company's initiative, to adapt to a new job or to change roles". However, agreements may provide for training for "personal fulfilment" or "professional development" to be undergone during the "time freed up" by the reduction in the working week.
- Unions' representative status. Currently, only one representative trade union has to sign an agreement on the reorganisation of working time for it to become applicable. Unions which do not sign can oppose the agreement, but only on the condition that they have obtained more than half the vote in workplace elections of employee representatives. In future, companies will benefit from the social security contribution reductions provided for in the law on the 35-hour week only if they have reached "an agreement signed by those unions that represent the majority of the company's staff", or which has been approved by a majority of the employees in a vote. However, on the national level, the government "will never withdraw the right officially to represent employees" and sign agreements on behalf of all workers now enjoyed by five union organisations - CGT, CFDT, CGT-FO, CFTC and CFE-CGC.
Reactions of employers and unions
In April 1999, MEDEF had demanded a one-year transition period and a pay premium of 5% for the first four hours of overtime in the week (FR9904173F). However, in an interview with Les Échos on 23 June, the employers' organisation's president, Ernest-Antoine Seillière criticised what he labelled "breathtaking off-handedness and obvious contempt for all of those who play a role in economic production and industrial relations", "a tactical manoeuvre", and "mediocre political trickery". Mr Seillière felt that the Minister's proposed year-long transition period, during which the first four hours of overtime would be paid at only 10% above the normal rate, simply represented the realisation that the idea of bringing in the 35-hour week on 1 January 2000 was a "failure", and proof that the idea was "unfeasible". While condemning proposals for the new law that were not in line with sector-level agreements so far concluded, he said he was convinced above all, that the final law would be even more stringent due to the political pressure exerted from within the governing left-wing coalition and by the unions.
The trade unions, for their part, all made statements relating to the two main themes of Ms Aubry's statement: the overall framework of the future law, and the issue of unions' representative status.
Some unions reacted positively to the statement, or at least with no great hostility:
- CFDT, which had greeted the progress report, had stated before the Minister's statement that on the matter of bargaining, "momentum should not be impeded", given that the reduction of working hours has generated "jobs where it has been negotiated". Consequently, the union confederation had asked for a one-year transition period, and thus publicly expressed its satisfaction at the Minister's decision. In a press release, it stated that "CFDT is pleased to see that in the bill for the second law (on the 35-hour week) the option to increase the momentum in industrial relations generated by the reduction of working time in France has been taken up (...) The principle of a one-year transition period will allow a genuine reduction of the working week to be brought about across the board, which is the only way to effect job creation (...) Unions and employers now have time to negotiate the appropriate way for the system to be introduced into each company";
- CFTC did not advocate a transition period, but was not against it. Relatively sceptical about the report presented on 20 May, it wanted the second law to abide by the agreements already reached. Once the principle of a transition period had been referred to by the minister, CFTC president Alain Deleu, stated that "there are grounds for discussion", and that this issue was not a source of friction for his union; and
- CFE-CGC, which had requested that the second law should come into full effect on 1 January 2000, welcomed the fact that the minister had taken on board "almost all the proposals we made, especially the distinction between three categories of managerial and professional staff and the option of calculating time worked in days".
Other unions expressed reservations or total opposition to the proposed law:
- CGT felt that "the proposed transitional period, although this was not clearly stated, would lead to the full implementation of the law being postponed until 1 January 2003, and its impact on jobs being delayed for the same period or even being compromised altogether." Maryse Dumas, confederal secretary with responsibility for the 35-hour week, stated that the mere 10% pay premium for the first four hours of weekly overtime, proposed for the year 2000, was "unlikely to encourage employers genuinely to apply the 35-hour week to their workforce". Moreover, she labelled the fact that employees obliged to work beyond their statutory hours will not be "paid at the higher rate due to them, even for a year" as "unacceptable". For CGT, the solution adopted for the SMIC by Ms Aubry "is still ambiguous (...) In order for the 35-hour week to be paid at the same level as the 39-hour week, the hourly rate should be raised by 11.4% at the same time as the statutory working week is reduced. The minister is silent on this subject," claimed Ms Dumas. She also asked: "Is the wage top-up that she refers to linked to the 'adjustment' period or is she considering it in its final form, as a kind of permanent two-pronged SMIC already challenged by most unions?" Ms Dumas also criticised the fact that CGT's proposals on overtime, part-time work, the working hours of managerial staff and vocational training "were not fully incorporated" into the announcement the Minister made about the bill; and
- ever since the original discussions of the law on the 35-hour week, CGT-FO has declared its outright opposition. The confederation felt that it would have been better to reduce working hours by bargaining and then apply the terms and conditions reached in agreements through legislation. It is totally opposed to the transitional period, and considers "that order will now have to be restored to the issue of the 35-hour week." General secretary Marc Blondel thinks that Ms Aubry "does not want to admit that the reality is far from what she hoped to achieve, so she is making concessions to the bosses".
The debate on representative status
The positions of the unions on the issue of their representative status touch on divisions other than those relating to the content of the law on the 35-hour week.
Of all the unions, CGT is the most favourable to the proposed provisions of the new law, requiring majority union support for agreements in some cases. It even concludes that the Minister has not gone far enough in her plan and that the legitimisation of agreements by majority unions, or through consultation of employees, should extend beyond the mere implementation of the law on the 35-hour week. "Ms Aubry says that the issue of representative status is raised in a particularly acute fashion over the 35-hour week. But why then draw conclusions from this observation only in relation to the granting or refusal of funding? It is the validity of the agreements that should be challenged", stated Roland Metz, the CGT official responsible for workers' rights (quoted in Le Monde on 23 June 1999).
CFDT is not hostile on principle to a system seeking the consent of all employees for agreements. However, it is surprised that the Minister has come up with "rushed" proposals for a change to the regulations governing the validity of company agreements. For CFDT, a matter "of such importance" requires an "in-depth debate between employers and unions" and should not be dealt with "through the back door".
CGT-FO, CFTC and CFE-CGC have all expressed their hostility to the proposals in this area. CGT-FO stated that such a measure could "entail the creation of company unions". It also fears that "agreements other than those concerning the 35-hour week" will also be affected in the long term. CFE-CGC finds this proposed reform "highly dangerous" in that it will end up reopening the debate on unions' representative status "by way of a subterfuge". Finally, CFTC protested vehemently that "social democracy overall is more valuable than one decision, even a very limited one, taken in one paragraph of a law."
The proposals announced by the Minister for Employment and Solidarity have sparked off twin debates, among trade unions and within the political parties making up the governing coalition, some of which (the Communists and the Greens) are worried by the government's "retreats" over the actual implementation of the 35-hour week:
There is some concern about the effect on a process of negotiations which has been gathering a great deal of momentum over the past few months (and which has to be continued at company level in order for the reduction of the working week to have any effect) of the implementation of legislative norms which may hinder this process. The Minister runs the risk of being accused of giving in to the MEDEFs appeals to delay by a year the actual reduction of the statutory length of the working week. Moreover, research has indicated that only a very substantial decrease in working time might have an effect on employment levels.
The reform of the rules currently governing the "legitimacy" of a collective agreement is also controversial. By wanting the "state-funded" agreements on the 35-hour week to be subject to "majority support" - a principle that runs counter to the de facto representative status of even minority unions - the minister has opened a debate on representative status, an issue that has been a taboo for a long time. This question, which came to the fore in July 1998 when an agreement on the 35-hour week in the metalworking industry was signed by the UIMM employers' federation and three minority unions (CGT-FO, CFE-CGC and CFTC) (FR9808129F), has been raised over many years in a large number of sectors and companies. Clarification of the current rules could help the trade union movement, whose audience is now very small, reach more people, especially in the private sector. (Alexandre Bilous, IRES)