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AB 2000 studies

Alain Boublil Blog

 

Unemployment and the working time

20 years ago were published the first rules reducing the legal duration of the working time to 35 hours per week. We know how much this measure was criticized at that moment even when it was in practice for a long time in the German industry. The socialists themselves, who were at its origin, are not anymore defending today that reform. As an irony of history, and maybe to celebrate this anniversary, the IG Metall union has just obtained, after a long and tough social battle, the possibility, for its employees who would ask for it, to work only 28 hours per week. Obviously the two social systems are not the same. In France the measure was imposed to all sectors and without any wage reduction. In Germany, the concept of a legal working time does not exist and what has just obtained IG Metall will only be applied to these who will ask for it and without complete compensation for the lost wages.

Atop of that, the employment situation is not the same. Germany is near full employment with an unemployment rate around 4.5% when France has a twice higher rate. Job creations in the private sector has reached almost 500 000 during the last two years and the unemployment rate, based on BIT method has fell just under 9% during the last quarter but due to the solid situation of French demography, the country is still far from a full-employment situation. The last period of high growth for the French economy goes back 1997-2001. The number of job creations had reached near two millions and the researches have shown that the adoption of the 35-hours week did not hamper the return to growth and had permitted the creation of a number of jobs between 300 000 and 400 000, according to the different sources. Following governments did not abolish the 35-hours but reduced its consequences. They encouraged in addition to it, the use of overtime through the exoneration of taxes or social charges.

Historically, the reduction of the duration of working time has always been considered as a social progress. It was obtained through weekly period or paid holidays. Regarding enterprises, it was made possible thanks to productivity gains generated by technical progress. The trend stated with agriculture and quickly spread to industry. If we have reached a threshold for the agricultural production, automation and the increasing use of robots for a larger number of production processes will again generate a large reduction of the jobs assigned to the production and that change will also concern services. Distribution is entering   a transformation era and banks are disrupted by on-line operations as postal services by emails use. Transportation will not be protected because the arrival of autonomous vehicles is announced with enthusiasm and all personal services, from medicine to financial advices will be offered thanks to artificial intelligence through algorithms. Even if we can be skeptical about the success of some of these projects, innovation trends are powerful and to imagine that jobs created by the new technologies will permit to compensate the lost ones is as futile as to believe that the losses in the agricultural sector in the past were compensated by these creates in the tractor industry.  

Unfortunately, in France, and it is surprising due to the high unemployment level, no connection seems to be made between the technological change, sometimes welcomed with an excessive optimism and its consequences on employment. Policies followed since 2003 have even deliberately ignored the phenomenon in reducing the impact of the reduction of the working time through incentives in favor of extra-time and the reduction of social charges on low wages. In the first case, these who already have jobs were favored to the detriment of unemployed ones through the incentives given to enterprises to increase the working time of their employees. In the second case, it was tried to slow the automation trend through support to jobs which would be condemned. In the same time, nothing was done in favor of these, highly qualified, which would be needed by the current technological trend. Germany followed, as far as working time is concerned, an opposite policy. As soon as the crisis occurred, when in France, extra-time was freed from taxes, which had become without any purpose due to the coming recession, the German government decided to support short time to allow companies to keep, as long as possible their employees to go through this difficult period and to keep the skills they will need in the future.

The difference between the policies followed in the two countries is also obvious regarding part time jobs. They represent a twice higher proportion of employees in Germany than in France. Charges reductions in favor of these jobs which had been granted when the 35-hours were adopted were even abrogated in 2007 when France decided to encourage extra time working. So, an advantage was given to those who had a job to the detriment to those who were looking for one. Enterprises did not take any profit from that strategy and the contrast is obvious regarding the health of major industrial groups on both sides of the Rhine. It is not possible to complain, in permanence, about the level of unemployment and the loss of market shares of French industrial groups and to quote as an example the results of their German competitors and to ignore their opposite strategies regarding working time, with the freeze and the support in favor of the increase of the working time on one side and the continuous reduction on the other side, matched with a necessary flexibility.

The innovation trend is irreversible and will accelerate. A persistent high level unemployment is an obstacle to growth because it generates saving habits and cautiousness which do not incite to investment. The German example shows that the reduction of the working time, under the condition it is matched with the flexibility which allows the enterprises to adapt themselves to cyclical fluctuations is favorable to growth and employment. It is also not doubtful that the method followed by France 20 years ago was not the right one. It was too authoritarian and didn’t take into account specificities related to the size of the companies and to the nature of their activities. Atop of that, it was put into practice without any discernment in the public sector where it was not necessary and it generated excessive costs. But it was the method which is subject to criticism, not the basis on which that policy was lying on.

In France, a significant fall of unemployment will not happen without a policy in favor of the reduction of the working time which allows a better sharing of employment. That policy must not make the same mistakes as in the past and include a better management of chosen part time working. It must, at last, offer, through a negotiation, the possibility to settle agreements between stakeholders which are flexible enough to make easier the adaptations to economic cycles and technological changes along with, in the same time, offering to employees, the possibility under satisfying conditions, to work less. It is also that, social progress.