Business France

France has embarked on an economic and social experiment that is changing the face of employment in that country. The country has instituted a law requiring 35-hour work weeks, believing that it will stimulate the economy by decreasing unemployment and creating new jobs. It was also expected that such a law would encourage innovation in labor negotiation contracts (Trumbull, 2001). Now that the law has been in force for four years, it makes sense to consider what effects the law has had on French employment.

Since the law was passed in 1998, some companies have devised creative ways to implement the law. The result has been employment law and practice that has both pros and cons.

The move toward this law began when the French Prime Minister made the promise of a 35-hour work week an important part of his election campaign in 1997. When he first made the promise, he was loudly criticized both in his own country and in other countries. The critics believed the approach was simplistic and unlikely to have the desired economic effects (Staff writers, 2002).

However, many citizens in France saw the need for change. While the law was being debated in the French parliament, workers staged demonstrations against unemployment in major French cities (Staff writers, 1998). The proposed law was strongly opposed by many French companies, fearful that their costs would rise unacceptably. Nevertheless, the law passed, and was implemented for larger companies beginning in 1998, with the requirement that all companies with more than 20 employees have 35-hour weeks in place by January of 2000 (Trumbull, 2001).

Criticism for France's proposed plan met with great skepticism from some quarters. Some critics suggested that the plan was little more than whitewashing, a showy display that would change little. Others suggested that French employees preferred the old time arrangements, which frequently included two-hour lunch breaks (Trumbull, 2001). However, some of France's companies have taken the new law and found creative ways to implement it that benefit both the business owners and the employees. One provision of the law in particular encourages innovation. The employers do not have to rigidly provide 35, and only 35 hours of work, all year. As long as the workers work 35 hours per week on average throughout the year, they have considerable flexibility. This allows a company to deploy their workforce more heavily during times of heavy demand and give their employees more time off during periods of lighter demand, making their employee expenses follow their real business expenses more sensibly. This part of the law is called "annualization." (Trumbull, 2001)

Samsonite, the luggage manufacturer, is one example of a company using annualization creatively and effectively. Their employees work about 42 hours per week during the summer, their peak season. During off-peak times, they work only 32 hours a week. The company complies with the law and has improved their business practices (Trumbull, 2001). Likewise, some retail companies now schedule their sales staff based on peak and non-peak sales periods.

Another way companies have met the law is through more holidays. Typically, the employees working at companies in compliance with the new law have 15 more days off per year than previously (Bishop, 2001).

The French company has provided incentives to businesses that fall into compliance with the new law. They have provided subsidies to companies for their lower-wage employees, including payments of the employees' retirement funds, health care, and unemployment insurance. By easing some of these expenses, the government has mitigated some of the cost companies would otherwise have to absorb in order to comply with the law (Trumbull, 2001).

There are indications that the law is working as hoped: the economy has improved and is showing steady growth, unemployment is down, and most employees like the new changes. In one survey, 80% of employees in 35-hour per week programs described their reactions to it as positive or very positive (Bishop, 2001).