Ah, summer in Europe. It's when everyone takes advantage of their 35-hour workweeks and seven weeks of vacation and holidays, and everything slows down or shuts down. Meanwhile, Americans toil in envy.
But in less time than it takes to get a tan, four powerful European companies have demanded their employees work longer hours. The trend is expected to spread as Western European companies strive to boost productivity and as employees try to keep their jobs from moving to Eastern Europe and beyond. 'At some point, workers have got to choose. They can't have high pay and long holidays,' says Richard Jackman, a professor at the London School of Economics.
The tipping point, Jackman says, happened on May 1, when the European Union, a trade and regulatory alliance of 15 Western European counties, added 10 members, including Poland, Hungary and the Czech Republic. New immigration restrictions are designed to prevent a flood of cheap labor, but companies in the West are now threatening to move their production east.
The math is persuasive: Wages in the Czech Republic, for example, are 40% less than in France, and employees work five more hours a week and get 11/2 fewer weeks of vacation.
Workers vote for longer hours:
That's why workers at a Robert Bosch car parts factory in France voted almost unanimously last week to work an extra hour a week without pay, to stop the car components company from moving the work to the Czech Republic. The French finance minister is also pushing to relax the law, which took effect in 2000, that mandates a 35-hour workweek. The law's intent was to encourage employers to add workers, which in theory would reduce the jobless rate while maintaining productivity.
The trend is even stronger in Germany, which shares borders with the Czech Republic and Poland and has rigid laws about hiring and firing.
Among the converts:
• 4,000 employees at two Siemens plants ended a bitter dispute in June and agreed to work 40 hours a week, instead of 35, for no extra money. The engineering giant had threatened to move production of its cellular and cordless phones from a plant in northern Germany to Hungary.
• Employees at Thomas Cook agreed last week to postpone a pay increase and accept a 40-hour workweek, up from 381/2, in an effort to put the tourism company back in the black.
• DaimlerChrysler struck a deal Friday that lengthens the workweek for research and development staff from 35 hours to 40 hours; employees at its Sindelfingen, Germany, plant, which makes the Mercedes C-class car, will work 39 hours. The company had threatened to move the production to South Africa. As part of the deal, top managers will take a 10% pay cut.
There is little doubt the pact will influence union bargaining for thousands of Volkswagen employees later this year. 'I am certain that after DaimlerChrysler, the negotiations at Volkswagen over cost cuts and job security will lead to a successful agreement,' German Chancellor Gerhard Schroeder said in a statement from his vacation villa in Italy.
The changes could not come soon enough for many corporate directors and politicians. Europe's economic recovery, which started at the end of 2003, is again trailing the USA's. For the 12 Western European countries that use the euro currency (including Germany, France and Spain), gross domestic product grew at a 0.6% annual rate between January and March, compared with an annualized 3.9% in the USA. The results for the April-June quarter, which are not available yet, are expected to show a similar gap.
The No. 1 reason Europe's growth lags the USA's might be that Europeans spend more time on the beach and less at their desks.
Work less, earn less:
In Western Europe, output per hour worked was 91% of U.S. levels in 2002, up sharply from 65% in 1970. But in seven of the most advanced European countries (France, Denmark, Germany, Ireland, Italy, Netherlands and Belgium), workers are just as productive as in the USA, according to the Organization of Economic Cooperation and Development, which published its 2004 employment outlook this month.
'We could confirm the popular perception that Europeans work less than Americans; in fact, they work about one-third less. But we also found that average incomes in Europe were also about one-third lower, because output per hour was essentially the same,' says Paul Swaim, economist with the OECD.
'Obviously, the next question is: Who has it the best, on balance? Is it better to work less and live with less income?' he asks.
Judging by the demonstrations and walkouts at companies such as Siemens and DaimlerChrysler, Europeans want to work to live, not live to work, as the saying goes rotary kiln. But with unemployment rates averaging 8% in Europe, and cheap labor in Eastern Europe, the choice gets simpler, if not easier.
'The corporate sector has had enough, and it is now in a better position to start demanding things from its workforce,' says Richard Prior, European Economist for HSBC in London hammer crusher. The recent cases 'are symptomatic of structural changes that can only continue.'
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