July 11, 2004
LEISURE WILL SET YOU FREE:
Europe Reluctantly Deciding It Has Less Time for Time Off (MARK LANDLER, 7/07/.04, NY Times)
For Michael Stahl, a technician at a cordless telephone factory in the town of Bocholt, summer is usually a carefree season of long evenings in his garden and even longer vacations. His toughest choice is where to take his wife and three children on their annual camping trip: Italy and Croatia are on this year's itinerary.Two weeks ago, however, Mr. Stahl got a rude jolt, when his union signed a contract with his employer, Siemens, to extend the workweek at the Bocholt plant to 40 hours from 35. Weekly pay remains the same. The new contract also scraps the annual bonuses every employee receives to help pay for vacations and Christmas expenses.
"I'll have to make do with less," Mr. Stahl said with a sigh. "Of course, the family will come off the worst."
After nearly 27 years at Siemens, Mr. Stahl, 42, feels he has no choice but to put in the extra time. Like millions of his fellow citizens, he is struggling to accept the stark new reality of life in a global economy: Germans are having to work longer hours.
And not just Germans. The French, who in 2000 trimmed their workweek to 35 hours in hopes of generating more jobs, are now talking about lengthening it again, worried that the shorter hours are hurting the economy. In Britain, more than a fifth of the labor force, according to a 2002 study, works longer than the European Union's mandated limit of 48 hours a week.
Europe's long siesta, it seems, has finally reached its limit — a victim of chronic economic stagnation, deteriorating public finances and competition from low-wage countries in the enlarged European Union and in Asia. Most important, many Europeans now believe that shorter hours, once seen as a way of spreading work among more people, have done little to ease unemployment.
"We have created a leisure society, while the Americans have created a work society," said Klaus F. Zimmermann, the president of the German Institute for Economic Research in Berlin. "But our model does not work anymore. We are in the process of rethinking it."
Anymore?
Meanwhile, the American Left, as usual, is hellbent on emulating Europe's mistakes, which the Right has, once again, saved us from.
Posted by Orrin Judd at July 11, 2004 12:28 PMIn theory, the 35 hour workweek sounds like it would reduce unemployment by causing companies to hire more people. Did it not do so in France because the theory is wrong, or because France has so many employment laws (e.g. making it hard to fire people) that companies avoid hiring anyway?
Posted by: PapayaSF at July 11, 2004 2:09 PMPapa : laws like this are generally motivated by what's known as the "lump of labor" fallacy. Here's Bruce Bartlett, writing last October on France's 35-hour workweek (italics mine):
The action was taken to increase jobs. France has long had an unemployment rate far higher than the U.S. It is now 9.6 percent there versus 6.1 percent here. The socialists figured that there was only so much work to do, so if people were only allowed to work 35 hours per week, rather that 40 hours, then this meant that 8 workers would be needed to do the work that 7 workers did previously.
Economists call this the "lump of labor" fallacy. It is wrong because work is not homogeneous, either geographically or in terms of skills. Nor is the demand for labor fixed. Most important, it is a function of the price. If unions raise the wage rate above the market-clearing level, then unemployment is going to rise. Similarly, if government mandates a rise in wage rates, as France did by reducing hours at the same weekly wage, then you are also going to see higher unemployment.
Consequently, it is not surprising that the French action reduced employment, rather than raising it, as was its intention.
Bruce Bartlett, "Lump of Labor Pains"
Remember that workers in Europe are much more likely to be salaried (as opposed to hourly wage) employees than are workers here, but the effect is seen even for hourly wage employees since there are always fixed costs associated with hiring.
"But our model does not work anymore."
Uh, no, their model *never* worked. They were just eating their seed corn. Works great during the winter--everybody has plenty to eat and gets fat. But when it comes time to plant for the next season, there's nothing there.
This is the same fallacy as the guy jumping from the Empire State Building. On the way past the 5th floor windows, he was heard to shout "So far, so good!"
Posted by: ray at July 11, 2004 7:06 PMThis fragment caught my eye: "After nearly 27 years at Siemens, Mr. Stahl, 42".
Posted by: David Cohen at July 11, 2004 8:10 PMThat would not be out of the ordinary for a German who did not go to university.
Posted by: joe shropshire at July 11, 2004 9:24 PMPapayaSF:
Why wouldn't raising the minimum wage to $45 per hour give everyone more money?
Joe: You are right, but it's easier just to say that an economy is really just a bunch of transactions and if you limit a critical part of the transactions by 1/8, you will reduce the whole thing by at least that much...
Posted by: EO at July 12, 2004 1:27 AMA leisure society no longer works.
No kidding? Thanks, Mr. Zimmerman, for that thought.
Posted by: Mike at July 12, 2004 12:41 PM