French Revolution

By THOMAS SANCTON/PARIS

When it comes to demonstrations, few countries can match France for style or frequency. Piqued farmers fill Parisian streets with fruit and vegetables to protest low prices; striking truckers shut down major highways until their demands for better working conditions are addressed. And last week, another howling, angry mob jammed a cavernous exhibition hall in Paris to vent its outrage over a proposed change in French labor law. Only this time the participants were senior executives and business owners.

The patrons are furious over the government's plan to lower France's legal workweek to 35 hrs. from 39. From a central stage lighted up like a boxing ring, speaker after speaker denounced the legislation as "retrograde," "idiotic" and "criminal." "This law is antieconomic," thundered Ernest-Andre Seilliere, head of the main employers association. "Nobody can make more by working less!" Truer to form, the Confederation Generale du Travail, one of the country's largest labor unions, was leading tens of thousands of workers in protest marches across the country, demanding that the law even mandate the hiring of new workers.

Welcome to France, the only major Western country where the idea of making a profit evokes popular fear and loathing, where privatization and flexibility are such taboo words that Prime Minister Lionel Jospin, a socialist, avoids using them. "You wonder just how exceptional France can be and still remain a player in the global economy," muses a Western diplomat in Paris. And yet--vive le paradoxe--France today boasts a healthy growth rate, low inflation and a muscular foreign-trade surplus. At the same time, Jospin has actually privatized more state-owned enterprises than did his conservative predecessors, has reined in state spending and is now preparing substantial tax cuts.

But he has been unable to substantially lower the country's alarming unemployment rate, which is currently 11.3%. His Labor Minister, Martine Aubry, has argued that a shorter workweek would oblige companies to hire more people, thus dividing the employment pie into more slices.

French employers think this is fantasy. The nonwage costs of adding a worker, they claim, overwhelm any increase in production--one of the reasons unemployment is high in the first place. Their obligatory contributions for benefits add up to 45% of salary costs. They pay a higher minimum wage than the U.S. or most European countries. Laying workers off is legally complicated and prohibitively expensive. And, in Michelin's case, political dynamite. When the famed French tiremaker said last month that it was slashing 10% of its work force after posting a 17% rise in earnings, Jospin threatened to sanction Michelin and any profitable companies that laid off workers "abusively."

No wonder many employers look with trepidation on the shortened workweek--though virtually nothing can stop it now. Following the passage of a preliminary law last June, 15,000 companies or sectors voluntarily negotiated 35-hr. accords with workers ahead of a year-end deadline. The second 35-hr. law, due to be voted on next week, gets specific on such matters as overtime, coffee breaks and the status of managers and minimum-wage employees. The latter must be paid 39 hrs.' salary for 35 hrs. of work--equivalent to an 11% raise--with the government making up the difference.

Few economists expect the law to kick-start employment. Indeed, the biggest fear is for French competitiveness. Across Europe, the costly brand of welfare capitalism that provided 30 days of vacation, inflexible work rules and ironclad job security is being dismantled to enhance productivity and create jobs. "My competitors are all non-French," says Gerard Charlier, head of a 70-employee firm that manufactures and exports casino chips. "They see what's going on here, and they're laughing."

Employers who try to skirt the new law will have to reckon with France's army of government inspectors. Lately there have been horror stories about the bureaucrats' staking out office buildings at night and clapping fines on executives who toil more than the current limit of 39 hrs. a week. It's against the law to work too hard in France--now even more so.

--With reporting by Jenny Rode/Paris

With reporting by Jenny Rode/Paris