TCS Daily

Welcome to the Working Week

By Jeremy Slater - February 27, 2004 12:00 AM

This month's vote by Members of the European Parliament to abolish any remaining opt outs to the so-called Working Time Directive presents the EU with another clear-cut decision: should it exist to promote its idea of a social model or instead be a driving force in the global economy.

At the time the directive became law, in 1993, the UK government argued that limiting workers to 48 hours per week would make the labor market too rigid and damage economic performance. It won a special opt out from this regulation, giving employers in the UK the right to ask workers to work longer. The vote by the Parliament this month would end the UK's exemption.

A decade after the Directive went into effect, with the European Commission considering a redrafting of the law, other nations are looking for a similar escape clause. Countries such as France, Germany and the Netherlands, who often defend their elaborate social protections to the hilt, are now attempting to negotiate opt outs and want their health workers to be exempt from the directive. Luxembourg wants an opt out for the hotel trade.

After a European Court of Justice ruling last September, German health experts said that limiting doctors' working time to 48 hours per week would cost an extra €1 billion a year as they would have to hire an extra 15,000 doctors. Needless to say, this is a heavy cost to bear when the government is busy trying to cut spending and reinvigorate the economy.

The Parliament's vote is intended to put pressure on the Commission to review the directive and abolish any existing, or the chance of any potential future, opt outs. The Commission had already said in a report in January that twice as many workers in the UK opt out of restrictions as those in the rest of Europe -- and this was not mentioned in a positive way.

The Working Time Directive requires EU business to provide:

1) a maximum 48-hour working week averaged over a reference period;

2) a minimum daily rest period of 11 consecutive hours a day;

3) a rest break where the working day is longer than six hours;

4) a minimum rest period of one day a week;

5) a statutory right to annual paid holiday of 4 weeks; and

6) night working must not exceed eight hours a night on average

And while the Commission studies new ways to impose limits on the hours people work there are moves by Spain, Italy and Ireland also to seek opt outs. The major economies of Europe consider labor market reform as key to either ensuring credible economic growth over the medium term or, in the UK's case, maintaining a regulatory system that has allowed its economy to grow at trend rate (2.5 percent) or above for the past ten years.

Ironically, further plans by Brussels to restrict working hours will prove unpopular with the workers whose interests those in the Parliament and the Commission claim to be defending. Former French Prime Minister Lionel Jospin's vaunted proposal for a 35-hour workweek was disastrous, and hurt even Socialist Party members seeking to earn a little overtime. It cost Jospin lost vital votes in the 2002 election; it helped to end his political career; and sent his party into political oblivion from which it still struggles to return.

In Germany, business leaders want to increase flexibility for more than just healthcare workers. The powerful trade union IG Metall has forced a 35-hour week on most workers, and businesses (and many workers, no doubt) want to increase this to 40 hours. With the German economy growing at just 1.4 percent per year over the past 10 years, against an EU average of 2.3 percent for the same period, German business is desperate to find anything that will improve its performance. The German government, hoping to avoid becoming the next Japan.

So, across several countries in Europe a surprisingly powerful coalition is forming that will try to negate the consequences of the Working Time Directive. But it will face tough opposition from some in the Parliament and Commission. Given Europe's economic outlook at the moment it may have no choice but to succeed.

The author last wrote for TCS about Europe's Enron.


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