Report evaluates 35-hour week law at half-way stage

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In June 2001, France's National Economic Planning Agency published a report seeking to present "the most balanced possible assessment" of the application so far of the recent legislation on the introduction of the 35-hour working week. The report presents a generally positive evaluation and contains some proposals that have fuelled controversy among the social partners.

In June 2001, the National Economic Planning Agency (Commissariat général du plan) published a report entitled Reduction of working time: lessons from its analysis (). Its objective is to produce an assessment at the half-way stage of the effects of the "Aubry" laws of June 1998 (FR9806113F) and January 2000 (FR0001137F), which reduced the statutory working week from 39 to 35 hours as of 1 January 2000 for companies with more than 20 employees, and from 1 January 2002 for smaller firms.

The report was prepared by a committee comprised of representatives of the state, trade unions, employers' associations and experts. It should be pointed out that the largest employers' organisation, the Movement of French Enterprises (Mouvement des entreprises de France, MEDEF), which was very hostile to both laws, refused to join the committee, but the two other central employers' bodies - the General Confederation of Small and Medium-sized Enterprises (Confédération générale des petites et moyennes entreprises, CGPME) and the Craftwork Employers' Association (Union professionnelle artisanale, UPA) - did take part. Following customary practice, the report, whilst seeking to "produce the most balanced possible assessment", was in fact the sole responsibility of the committee's chair, Henri Rouilleault, director of the the National Agency for the Improvement of Working Conditions (Agence nationale pour l'amélioration des conditions de travail, ANACT ), while the opinions of the social partners were presented in an appendix.

Positive evaluation overall

First, the report finds that the law has had a genuine impact on actual working time: 62% of full-time employees in companies with more than 20 employees now work a 35-hour week, whereas only 1.6% of them did so in 1996. It is estimated that the agreements on the reduction of working time signed up to December 2000 (the laws have been implemented primarily through collective bargaining) have generated a net total of 265,000 new jobs. The total expected effect, including firms with fewer than 20 employees, will be the creation of around 500,000 jobs. The combination of productivity gains, agreements on pay restraint and state funding has enabled the reduction of working time to be brought about without lowering monthly pay or negative impacts on companies' competitiveness.

Second, surveys of employees indicate that the vast majority of them feel that their quality of life has been improved, through the increase in free time. However, the results are much less satisfactory in relation to working conditions, due to an intensification of workloads, and/or the irregularity and sometimes unpredictability of work schedules.

Third, the two laws have boosted the volume of collective bargaining at sector and company levels to an exceptional degree, with more than 30,000 company-level agreements concluded in 1999 (FR0007178F) and 2000.

Recommendations

The report makes three key recommendations:

  • the fight against unemployment requires that the law be applied to companies with fewer than 20 employees, on the date planned. Only negotiated adjustments can be countenanced if the transition process is difficult, eg if the firms concerned fact recruitment problems;
  • apart from the quantitative goals in terms of job creation or maintenance, a serious effort has to be made with regard to the quality of jobs, working conditions and bringing working time into line with other demands on time generated by people's social and private lives; and
  • the extreme complexity of the legislation and its implementation through sector- and company-level agreements requires a radical overhaul. The law must be confined to the essentials such as setting the rules for "public industrial relations order" and regulations applicable where no collective agreement exists. The amount of freedom allowed to collective bargaining should be extended on the condition that the "legitimacy" of the agreements is ensured - ie the signatory trade unions must represent the majority of the staff concerned ("majority" agreements - FR0006170F).

Three immediate problems

The report identifies three problems which should be addressed immediately;

  • the minimum wage. The national minimum wage (salaire minimum interprofessionnel de croissance, SMIC) is set on the basis of an hourly wage. To avoid a pay cut, the law has provided for a monthly wage guarantee calculated on the basis of the rate of SMIC in force when the changeover to the 35-hour week occurs (FR0007177N). As the SMIC is readjusted annually, wage disparities increase, depending on the date when the reduction of working time takes place in a particular company. The system is in urgent need of rationalisation;
  • calculating actual working time. The application of the law has given rise to many disputes about the definition of the limits of working time (time spent training, travelling, teleworking, or on call at home etc). Collective bargaining and the courts must provide clearer and more stable definitions of actual working time (ie working time which is subject to the 35-hour norm); and
  • funding state aid. The impact of the reduction of working time on employment and unemployment levels has had positive effects on state finances. There has been a reduction in the costs incurred through unemployment benefit, higher social security contributions due to the new jobs created, and taxes paid on the corresponding salaries. Overall, state aid for the reduction of working time (which involves reductions in employers' social security contributions) may be approximately self-financing due to the costs avoided, and the extra revenue generated. Disputes have arisen from the fact that the social partners co-manage the unemployment insurance fund and are involved in the tripartite management of the social security funds. They thus rejected the state's unilateral decision to withdraw the corresponding sums from the fund-holding bodies to finance working time reductions (FR9910112F). This issue has not yet been definitively settled.

Social partners' positions

All the main trade unions have asked for the 35-hour week law to be fully applied by the planned deadline, though some stipulate that adjustments arrived at through collective bargaining are possible. Similarly, they have requested the rapid elimination of the inequalities relating to the SMIC. Their other main points in response to the National Economic Planning Agency report are as follows:

  • the CFDT confederation has emphasised "the indispensable renewal of the entire system of collective bargaining" and particularly the principle of "majority" agreements, and the joint monitoring of the implementation of the agreements. In relation to state funding for the 35-hour week, it has stressed the "necessity of an overall round of negotiations on the relationship between the social welfare funds and the state";
  • CFTC is concerned at the "untimely increase in the flexibility of working time" and at the law's implementation running out of steam. Hostile to the principle of majority agreements, it has suggested the strengthening of the right of opposition for majority unions that do not sign an agreement;
  • CGT rejects the rationale of lowering employers' payroll costs which is linked with the reduction of working time, characterised by pay restraint, exemptions from social security contributions, and a slower rise in the SMIC. The union stresses the risks relating to working conditions and the quality of jobs. CGT wants the principle of majority agreements to become the norm, and is demanding that the existing hierarchy of the various levels at which workers' employment conditions are defined and improved (ie the law, sector-level agreements and company-level agreements) should remain, rather than allowing each level to assume greater autonomy; and
  • CGT-FO is critical of the dominant emphasis, endorsed by the report, on an economic rationale that prioritises the companies' perspective, and maintains that raising the SMIC, as a result of the subsequent macroeconomic boost, would have a positive impact on employment levels. It opposes the principle of majority agreements and is demanding that the hierarchy of agreements (intersectoral, then sector level, and then company level) be maintained.

UPA (for craft employers) is so far the only employers' association to have taken an official stance on the report. UPA is hostile to the 35-hour week legislation, and intends to adopt a pragmatic approach to its implementation. It is not requesting the postponement of the law's application for small businesses, but the option of the greater use of overtime for those categories of companies that will encounter specific problems. Lastly, it is prioritising sector-level agreements that can be directly applied in small companies.

Commentary

Contrary to the pessimistic forecasts made by their numerous detractors, the Aubry laws have generated a real reduction in working time, and a considerable level of job creation without negative effects on companies' competitiveness. The laws' consequences for working conditions are, however, more ambiguous, and have given rise to many industrial disputes about which the report remains silent.

While a heated political debate has begun on the prospects of revising the law or postponing its application to small firms (FR0101117N), the report comes out in favour of maintaining the content and deadlines for the law's application, with some modifications, mainly arrived at through sector-level collective bargaining.

Although the quality of the assessment presented in the report is widely acknowledged, some of its proposals - those on the SMIC, the funding of state aid and the reform of the relationship between the law and collective bargaining - have sparked off a lively controversy. The proposals prefigure the difficult nature of the choices facing parliament and the government in a context dominated by the coming presidential elections. (Jacques Freyssinet, IRES)

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