Friday, July 27, 2007

French may see longer workweek

The new president, Sarkozy, slashes taxes and tries to create a better climate for businesses.

By Marjorie Miller
Times Staff Writer

July 27, 2007

PARIS — The French want to be paid more to work less. When they're not on holiday, they're on strike. Or, as President Bush probably never said, the trouble with the French is that they don't have a word for "entrepreneur."

It's all true except when it isn't.

The word "entrepreneur" may have gone missing from the French spirit, if not from its vocabulary, but the new president, Nicolas Sarkozy, is determined to bring it back and has the legislature working overtime in a special session to do so.

His center-right government is slashing taxes and encouraging expansion of the 35-hour workweek. It's trying to mandate minimum services during France's frequent transportation strikes. In general, it's trying to make things easier and more profitable, particularly for the small and medium-size businesses that are the backbone of the French economy.

The changes Sarkozy seeks amount to a cultural revolution in a country that ousted its aristocracy in a bloody revolution in the 18th century and, in recent times, has had years of Socialist Party rule protecting its labor unions and workers' rights.

Many French entrepreneurs are ready for a storming of the economic Bastille, as it were.

"It is very, very expensive to run a company here, and some people think we're crazy to run a company in France," said Olivier Willkomm, 34, co-owner of OGK Art Design. "I am happy with Sarkozy's speeches about how we want people to work. This is really something new that we haven't heard in France for years."

Willkomm is among a growing class of thirtysomething French men and women who are hungry to do business. They want to be their own bosses, to exercise creativity and independence at work. And they say they want to make money, which in France is akin to admitting a dirty secret.

"This is not like the United States. If you want to open a company in France, you're the bad guy. You're trying to make money, to steal money," Willkomm said.

"In France, if you say you are a salesman, it means maybe you are a thief or a scammer," said Guenaelle Boch, 32, who gives motivational and sales training workshops through her husband's firm, Idefi.

French society has valued stability over risk-taking. Even today, more than three-quarters of the country's youths between the ages of 15 and 25 say they would be content to be a functionnaire, or civil servant — a lifetime job that comes with subsidized lunches, good healthcare and early retirement benefits.


Trickle-down economics

About 5 million people, or nearly 20% of the workforce, are employed by the government. Sarkozy wants to reduce the size of the public sector by filling only one of every two posts vacated through retirement, and to spur private hiring through tax cuts and employment flexibility.

The French president hopes he can manage to implement a trickle-down theory without the confrontations that President Reagan had with air-traffic controllers and that British Prime Minister Margaret Thatcher had with mine workers in the 1980s.

Sarkozy also hopes to avoid a repeat of the mother of all French strikes: a massive walkout of students, postal and transport workers and others over pensions and firing laws that lasted five weeks in 1995 and paralyzed the country. That winter strike forced workers to hitchhike and ride bicycles in the snow to get to their jobs.

Although French workers are generally productive when they're on the job, the 35-hour workweek, on top of five weeks of annual vacation, has meant they spend far less time at work than their competitors. On average, the French log 1,440 hours a year, compared with 1,850 in the United States and 2,000 in Asia, says Sarkozy advisor Nicolas Baverez.

To stay within 35 hours a week, many people take Mondays or Fridays off to make long weekends, or Wednesday afternoons, to be with their children on a day when school lets out early. As a result, the French say, the only fully reliable workdays in the country are Tuesday and Thursday.

Valerie Doublet, an account manager at Societe General bank, said she chose to take Wednesdays off not only to be with her children, but also to do business and administrative errands that can't be done on the weekend. The latter proved futile.

"I thought it would allow me to do everything I couldn't do during the weekend, but as a matter of fact, a lot of administrative offices are not open Wednesday. As a result, I get nothing done on Wednesdays," she said.

Sarkozy's initial cuts will eat into the government budget. He already has warned his European Union partners that he plans to cut taxes by up to 15 billion euros, or more than $20 billion, a year to stimulate the economy and that he probably will renege on promises to eliminate the French budget deficit by 2010. He says he cannot guarantee it before 2012.

The legislature passed the first laws quickly and without active opposition from France's strong labor unions: In the first two weeks of July, the new laws offered a 75% reduction in wealth taxes on investments of up to 50,000 euros a year — almost $69,000 — in small and medium-size businesses. They granted tax deductions for home mortgages and eliminated most inheritance taxes, in hope that the money would be spent and invested in French businesses. And they eliminated taxes on overtime pay for both the employer and employee, making it more profitable for both sides to extend the workweek beyond 35 hours.


Curbing strikes

The next step in Sarkozy's plan is sure to be more problematic. He wants to pass a bill requiring that at least minimal transportation service be provided at peak hours during all labor strikes. The bill also would require individual workers to give two days' notice of their intention to strike, so that commuters may plan.

The government says it is not attacking the right to strike, but labor unions disagree and have planned demonstrations for Tuesday. Even a short strike brings Paris to a standstill.

"This bill is a great example of hypocrisy," said Bernard Thibault, general secretary of the General Confederation of Labor. "If the government keeps on ignoring the unions, then it shouldn't be surprised if things get more tense."

Sarkozy's supporters say he does not plan to reduce social benefits and his brand of capitalism is not as harsh as that in the United States. The French look across the Atlantic and see a precarious life for the middle class and the large numbers of working poor, with jobs lost in the blink of an eye, little or no health insurance or retirement benefits.

"We don't want a society like America's," said Renaud Girard, a political analyst for the conservative Le Figaro newspaper. "Sarkozy will move cautiously. The social net will be more Danish, more efficient. He's not a free-trader. He thinks, why should we help the Chinese destroy our industries? He's certainly not more to the right than [former British Prime Minister Tony] Blair."

The French often cite Denmark as a model of an open climate for business with concern for workers. Even leaders of businesses say they don't want to lose healthcare benefits or five weeks of annual vacation; they want a culture that embraces business, and they see Sarkozy as the man to lead that change.

Business gave strong support to Sarkozy in the May 6 runoff election, in which he won 53% of the vote, and they gave his conservative party a slim majority in the June legislative elections. They see in him a dynamic iconoclast, an immigrant's son who lacks a typical French name or a traditional degree from the National Administration School, the elite training ground for most French politicians. And he ran his own business, a law firm.

"Sarkozy is not intellectual, he is dynamic," said Isabelle Abry, a wealth manager at a private bank. "He's not Charles de Gaulle…. But we need growth. Many of my clients were waiting for these election results before investing."

Entrepreneurs say they are looking for lower and simplified taxes, less bureaucracy, more flexibility in hiring and firing and easier bank loans.

Most hiring is done according to government-drawn contracts, and firing can take more than a year — much longer if an employee challenges the termination in labor court. For every euro spent on salary, the employer pays an additional 80 cents in taxes, making it very expensive to keep full-time employees.

Pay sheets are so complicated by taxes that it is often easier to hire an outside firm to fill out the paperwork and cut the checks. Many small and medium-size companies opt simply to sub-contract rather than to take on employees who can be hard to fire if they prove incompetent.

Those opting to go into business say they realize that the population is aging and the government cannot sustain costly social benefits at the current level for very long. They want to make money to enjoy while they're young and put away more for their old age. They also want the challenge of running a business.

"We really want to be our own bosses," said Igor Makovetzki, 33, a DaimlerChrysler sales manager who founded a luxury food company on the side with eight partners. "A lot of people don't like risk. But there is a new, trendy segment of people who are more materialistic. They like money and clothes and cars … and they want to make business."



Achrene Sicakyuz of The Times' Paris Bureau contributed to this report.



On the clock

Average number of hours worked each week in selected countries

Mexico -- 45.2

United States -- 43.6

Japan -- 41.8

Italy -- 37.9

Ireland -- 36.9

Sweden -- 35.6

Spain -- 34.8

France -- 34.7

Australia -- 34.7

Austria -- 34.2

Data are from 2005.


Source: International Labor Organization. Graphics reporting by John Jackson

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