Thu, Jul 15, 2004 - Page 9 News List

Europeans might have to start working harder

Changing demographics mean that workers in Europe might have to put their shoulder to the wheel and emulate their counterparts in North America and Australasia

REUTERS , London

YUSHA

Blame fierce globalization, greedy bosses, cowed workers or just the facts of life in free market economies -- but many Europeans are starting to accept they may have to work longer hours to safeguard their jobs.

Prompted by recent one-off labor agreements in Germany, public opinion shifts and a change of political gear in Paris, and Berlin, economists detect the winds of change and say the implications could be enormous for the future of the region.

The euro zone is facing dire demographic trends which are likely to see its working population, and hence its economic capacity and potential, decline over the coming decade unless either output per worker or its income growth accelerates fast.

Working harder -- with or without extra pay -- appears difficult to avoid.

"The cases we've seen are still isolated events but they look like bellwethers of the future," said Paul Swaim, economist at the Organization for Economic Cooperation and Development (OECD).

Swaim was one author of the OECD's 2004 Employment Outlook, which starkly illustrated the divergence in working time between Europe and the US over 30 years.

Since 1970, OECD data shows work hours per head in Germany, France, Finland and Spain fell by about 15 percent while those in the US, Canada and New Zealand rose by 15 percent.

Last year, average annual hours worked by employees in Germany, France and the Netherlands all came in under 1,400. The equivalent number for US and Japanese workers was 1,777 and 1,828 and in Britain was about 1,650.

Add the fact that Germany has the second highest labor costs in the world and the economic strain becomes clear.

For generations, it was accepted that as societies became wealthier fewer working hours were needed and more leisure time was possible and desirable. But that consensus broke down in the 1980s.

Business-friendly governments and supply-side economics in the US and Britain pushed working hours higher again just as continental Europeans drove harder for a shorter workweek, either as a trade-off for wage restraint or as a way of prodding employers to create more jobs.

The former approach accelerated long-term growth at a price. The OECD ranks the US, Britain, Canada and New Zealand as the four countries with the weakest employment protection laws of its 30 members.

Continental Europe went the other direction. German unions forced manufacturing firms to accept a 35-hour week with a wave of industrial unrest in 1984. In 2000, France followed suit when Lionel Jospin's government enforced the same for all employees.

Now, the elastic separating divergent trends between the big English-speaking economies and the euro zone may have snapped.

Last month, industrial giant Siemens, while threatening to move thousands of jobs to Hungary, agreed with unions and workers in two German mobile phone plants to increase the working week to 40 hours from 35 hours for no extra pay.

Workers at these plants and the IG Metall union agreed to an effective 12.5 percent cut in hourly wages to save their jobs.

Dozens of other German firms are reported to be seeking similar pacts. Carmaker DaimlerChrysler is negotiating longer hours with more pay for some staff and thousands of public sector workers are being required to work longer.

An opinion poll this month found 57 percent of Germans believed employers and unions should re-introduce the 40-hour week to reduce labor costs. Asked if they would work longer with no extra pay to secure jobs, 79 percent said "Yes." Even 63 percent of union members agreed.

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