Studies relaunch debate on further liberalisation of shop opening hours

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In October 1999, the SFS Institute for Social Research and the Ifo Institute for Economic Research presented studies on the effects of longer shop opening hours in Germany. These studies were commissioned by the Federal Ministry of Labour and the Federal Ministry of Economy and Technology in order to identify the effects of the change in opening hours legislation in 1996 on the retail trade and customers on the one hand, and on employees and employment levels on the other. The government is expected to make proposals for a further liberalisation of shop hours on the basis of these findings. Despite negative results in terms of the development of turnover and employment, Ifo recommends a further extension of shop opening hours. In first reactions following the publication of the two studies, trade unions have stated clearly that they are against further liberalisation, while the main retail employers' association has moved to a position in line with Ifo's recommendations. Government, unions, the retailers' association and churches have unanimously declared that they are against any extension of shop opening hours on Sundays and public holidays.

On 12 October 1999, two social and economic research institutes, namely the Dortmund Institute for Social Research (Sozialforschungsstelle Dortmund, SFS) and the Munich-based Ifo Institute for Economic Research (Ifo Institut für Wirtschaftsforschung) submitted reports on the effects of longer opening hours in the retail trade to the Federal Ministry of Labour and the Federal Ministry for Economy and Technology. The ministries asked for these reports after the federal government changed the Shop Closing Hours Act (Ladenschlussgesetz) in June 1996.

Until 1996, shop opening hours were limited to 07.00-18.30 on weekdays (though shops could open on Thursdays until 20.30) and 07.00-14.00 on Saturdays (with some exceptions). On Sundays and public holidays, shops were generally closed. In June 1996, the German government passed a new law regulating opening hours, which was put into effect on 1 November 1996. Shops were now free to open from 06.00 to 20.00 during the week (until 20.30 on Thursday), and from 06.00 to 16.00 on Saturdays (and until 18.00 on four weekends before Christmas). Bakeries were allowed to open on Sundays for three hours.

There is an intense current debate on shop hours, as a result of the evasion of the law through various local initiatives during summer 1999. Several cities have started to allow shops to open on Sundays, referring to the existing legal clause that allows shops in areas with a high level of tourism to open on Sundays and public holidays, as well as late in the evenings. To date, huge areas have been designated "tourist areas," though others have stayed as they were. Several politicians and managers of major retail firms have demanded a general repeal of the law regulating closing times. In parallel, the federal state of Berlin has moved a petition to the federal council requesting an extension of opening hours from Mondays to Saturday until 22.00. Furthermore, it proposes additional possibilities for opening shops on Sundays.

Results of the Ifo study

In two representative surveys (involving 2,500 customers and 2,500 shops) the Ifo Institute has calculated that only half of all customers are making use of the current evening and Saturday afternoon opening times - as table 1 below indicates.

Table 1. Use of the new opening hours by the customers (%)
Frequency of use Monday to Wednesday Thursday Friday Saturday
Never 56% 45% 49% 47%
Now and then 37% 45% 40% 43%
Every week 5% 8% 10% 9%
No answer 2% 2% 1% 1%

Source: Ifo/Infratest - opening hours/customers survey 1999.

On the whole, customers prefer food stores and supermarkets or shops which are located in town centres for their evening shopping. The number of customers in favour of a repeal of the law on shop opening hours, as well as the number of those who would like shops to be open on Sundays (at least for several hours), stands at around 45%.

Concerning the retail trade itself, the results of the survey indicate that only a small number of shops take advantage of the opportunity to open longer on at least two days between Mondays and Fridays and Saturday afternoon - see table 2 below.

Table 2. Use of the new opening hours by shops, by annual turnover (%)
Annual turnover At least two weekdays after 18.30 Saturdays after 14.00 At least two weekdays and Saturdays
Total 33% 29% 23%
Under DEM 250,000 25% 21% 16%
DEM 250,000-DEM 1 million 29% 25% 20%
DEM 1 million-DEM 2 million 33% 31% 21%
DEM 2 million-DEM 5 million 46% 37% 30%
DEM 5 million-DEM 25 million 81% 77% 71%
DEM 25 million-DEM 50 million 92% 95% 91%
DEM 50 million-DEM 100 million 98% 98% 97%
DEM 100 million and over 99% 99% 99%

Source: Ifo/Infratest - retail trade survey 1999.

Only a quarter of all shops want a repeal of the legal restrictions concerning closing times during the week. At the same time, nearly 60% want a general prohibition on Sunday opening. Nevertheless the Ifo Institute recommends a repeal of the existing regulations and a total liberalisation of closing times from Mondays to Saturdays, and a federal law to regulate the opportunity for shops to open on four Sundays before Christmas. The responsibility concerning further opening on Sundays should be delegated from federal level to the federal provinces and local level.

Results of the SFS study

While the Ifo Institute concentrated its study on customers and employers, the SFS study examined the effects of longer opening hours on the employees. Accordingly, it analysed first the level of employment and second the working conditions and life circumstances of the employees

The results of the representative study (of 2,300 employees in the retail trade), plus focus groups involving representatives at plant level, show that there has been a loss of jobs in the retail sector since 1996, as shown in table 3.

Table 3. Change in retail employment by type of worker 1996/9 (%)
Type of worker Change in employment
Full-time -11.1%
Part-time (liable to social security) -5.2%
"Marginal" part-time employment 2.5%
Trainees -2.5%
Owners/family members -1.3%
Total -5.8%

Source: SFS/Ifo survey of establishments 1999..

Overall, the prolongation of opening hours has not stabilised the employment situation in the retail trade. The majority of those shops making use of the longer opening hours have been able to cover the longer trading hours with the same number of employees or even less - see table 4.

Table 4. Development of employment in shops with longer opening hours, 1996/9 (%)
No change in employment levels 43%
Additional positions 21%
Fewer positions 36%

Source: SFS/Ifo survey of establishments 1999.

Those shops making use of the longer opening times have, to a high degree, changed their working time schedules in the direction of more flexible regulations. SFS found that a high number of full-time employees take advantage of the new regulations, because they quite often work in shifts and with new rolling systems, and longer periods of free time (Freizeitblöcke) are widespread. However, the requirements for further flexibility have increased for all employees. Both full-timers and part-timers often have working schedules which change every week. Although many employees can articulate their individual working time preferences in advance, the key problem seems to be the short notice they are given. Because of shortages of staff, the original schedules are changed at short notice and the employees very often have to work overtime. All this leads to additional stress for all employees, as indicated by table 5, which examines the proportion of employees who state that their personal situation in a number of areas has improved or deteriorated.

Table 5. Changes in personal situation of full-time employees because of longer opening hours (%)
Improved Deteriorated
Reconciliation of work and private life 8.9% 46.8%
Time for family life 5.3% 41.7%
Opportunities for leisure time 14.1% 35.2%
Time for further training 4.0% 34.8%
Exhaustion after work 2.9% 30.9%
Relation to customers 18.5% 8.5%
Income 13.5% 2.3%

Source: SFS/Infratest survey of employees in retail trade 1999.

Nearly half of the employees would like to have opening hours as they were before 1996. Women prefer shorter working times than men, which may result from the fact that they are in the majority responsible for household tasks and childcare. It should be borne in mind that retail is an important area for women's employment; more than two-thirds of all employees are female. With a prolongation of opening hours, retail work becomes less attractive for women and offers fewer opportunities for reconciliation of work and family life.

Reactions

The reaction to the reports of the Commerce, Banking and Insurance Union (Gewerkschaft Handel Banken und Versicherungen, HBV) and the German White-Collar Workers' Union (Deutsche Angestellten Gewerkschaft, DAG), which represent most employees in the retail trade, was given in a joint statement to the effect that they are against further liberalisation. They fear that liberalisation will support further concentration in this sector, because only larger enterprises are able to extend their opening hours, and thereby achieve profits to the detriment of smaller and medium-sized shops, which do not have enough personnel and business resources to make use of evening opening times for their economic advantage. This would lead to further job losses. The head of HBV, Margret Mönig-Raane, described the Ifo Institute's recommendation as "incomprehensible" and asked the government to maintain the existing regulations.

Holger Wenzel, the main managing director of the national employers' association for the retail trade, Hauptverband des deutschen Einzelhandels (HDE), described the results of both studies as "not surprising". He stated that it had become obvious that longer opening hours do not automatically lead to higher turnover and a better employment rate. Nevertheless, HDE published a press release stating that its members agree with the Ifo Institute's opinion that a further liberalisation might be to the advantage of the customers. Therefore, they will support this process as long as the existing regulations concerning Sundays and public holidays remains untouched.

The federal government is waiting for a comprehensive report on the two studies before it takes a position concerning any new legislation. However, it seems as if a new law on further liberalisation of opening hours during the week will be forthcoming. According to a press release, the government has no interest in changing the law concerning opening on Sundays and public holidays.

Commentary

In the past six months, the impression has formed that Sunday and public holiday opening is actually the main theme of the debate over shop hours. Unions, the employers' association, churches and the government, as well as some opposition political parties, have announced in rare harmony that they will not support an extension of opening hours on these days. By putting this topic into the foreground, the move towards further liberalisation from Mondays to Saturdays becomes the lesser evil and at the same time more acceptable for nearly all groups in society, with the exception of the trade unions and employees in the retail trade. (Alexandra Scheele, Institute for economic and Social Research (WSI))

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