Daimler seeks way around France
PARIS (Bloomberg) Daimler is the latest company trying to skirt French restrictions on the length of the workweek, which was introduced 15 years ago by the Socialist Party.
Daimler says it wants workers in Hambach, France, where it makes the Smart ForTwo, to put in more hours and has hinted that it may shift production if it cannot reach an agreement with employees.
French President Francois Hollande, who was general secretary of the Socialist Party when the 35 hour workweek bill was created in 2000, is now seeking to make France’s labor market more flexible to combat high unemployment, now at 18 year high.
His “employment securization” bill, adopted in June 2013, is being used by companies such as Daimler in try to increase hours worked each week beyond 35. The bill allows companies to temporarily change the number of working hours in exchange for a guarantee to keep jobs.
“It’s the beginning of the end of the 35 hour week,” said Ludovic Subran, chief economist at Euler Hermes in Paris. “Intelligent managers talk to the unions, they look at the numbers, they look at the competition, and they make it work for them. You will see innovative ways of going around this problem of the 35 hours.”
The automaker is offering to pay an additional 6 euros for each of the additional hours, which is lower than the legal minimum gross hourly wage of 9.61 euros, said CFDT union representative Patrick Hoszkowicz. He added that the company is also offering a one time bonus of 1,000 euros to all employees if a deal is struck.
Daimler declined to provide details of the negotiations, which will resume in September.
In making this offer Daimler joins a string of companies that have sought to circumvent the 35 hour workweek law. In 2004, employees at a Bosch factory near Lyon that makes solar panels and diesel systems agreed to work more days a year for no extra pay to prevent the plant from moving to the Czech Republic.
In 2010, workers at a General Motors factory making transmissions agreed to fewer holidays to keep their plant open. PSA Peugeot Citroen and Renault SA, the two French carmakers, both signed labor agreements hermes replica ashtray
with union representatives in 2013 to increase work flexibility and freeze wages. In Renault’s case, the accord allowed it to increase the workweek to 35 hours from 32.
But Daimler still faces an uphill battle against union opposition. Company spokesman Sebastian Wahle said the talks in France are part of efforts to improve “competitiveness to ensure viability” of all production sites. “It’s a way to freeze wages without any guarantees in return,” labor leader Hoszkowicz said.
Despite the 35 hour a week law, the French do not necessarily work fewer hours than their neighbors. French full time employees worked an average of 40.5 hours a week in 2014, just one hour less than the European average, according to Eurostat.
“No one has an easy solution for the extremely complicated labor code in France,” Subran said. “At a local level, companies are trying to make things happen, and they are doing it by putting stakeholders around the table.”
France has lagged behind other European countries in loosening its labor laws.
Gerhard Schroeder, Germany’s last Social Democrat leader, pushed through his “Agenda 2010” package five years ago, cutting long term benefits and enabling firms to opt out of national labor accords.
In 2012 Spain allowed firms to negotiate their own pacts and reduced severance pay.
Italian Prime Minister Matteo Renzi’s Jobs Act this year overhauled the labor market to make hiring and firing easier, and simplified the country’s jungle of work contracts.
Every government in France since 2000 has weakened the 35 hour law without actually revoking it. While the idea of the law was to create jobs by sharing work, economists are divided on how well it has succeeded.
Opponents say it has made France uncompetitive. Hollande’s government extended the number of years over which the hours can be increased from two to five in a law recently pushed through by Economy Minister Emmanuel Macron. The government also promoted negotiations at the company level in a major break from previous Socialist governments’ “one size fits all” approach.
“The government trusts that social dialog as close to the ground as possible will allow favorable solutions for both employees and companies,” a spokeswoman for the Labor Ministry said. No government had dared return to a 39 hour workweek in the face of opposition from national unions. In 2007 Hollande’s predecessor, Nicolas Sarkozy, abolished payroll tax on overtime, cutting companies’ cost for employees who work more than 35 hours a week. Hollande brought back the payroll tax while making it easier to fire workers and negotiate labor accords.