Europe Reluctantly Deciding It Has Less Time for Time Off

[RonOnGuitar]

Earlier this year I noted here the following observation of the EU econony by Czech President Vaclav Klaus:



"that will not change until people start thinking and realizing they are not moving toward some sort of nirvana. They are still in the dream world of welfare, long vacations, guaranteed high pensions, and cradle-to-grave social security, and which obviates the imperative need to face really serious underlying issues."



According to today's frontpage story in the New York Times it seems they are now, as Klaus said, "thinking and realizing".

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Europe Reluctantly Deciding It Has Less Time for Time Off

By MARK LANDLER



Published: July 7, 2004





RANKFURT, July 6 — 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."



From the 1970's until recently, Europe followed a philosophy of less is more when it came to labor, with the result that Europeans work an average of 10 percent fewer hours a year than Americans. Germans, with the lightest schedule, work about 18 percent fewer hours.



The job creation argument went hand in hand with the greater social premium that Europeans place on leisure. In the land of the four o'clock rush hour and the monthlong summer holiday, it does really seem, as the cliché goes, that Europeans work to live, while Americans live to work.



Siemens, however, upset that conventional wisdom by threatening to move production of cordless and cellular phones to Hungary, where salaries are a fraction of those in Germany. That would have cost about 2,000 jobs in a country that, with a jobless rate of 10.3 percent, can ill afford it.



"It's about lowering labor costs," said Peter Gottal, a spokesman for Siemens, which is based in Munich. "Where we are in a global competition, 35 hours are no longer feasible. We just need more hours."



Siemens and its union say that the contract is not a template for the rest of German industry, but it is being viewed that way. The company, one of Germany's largest employers, is negotiating wages at five other factories, and it may demand some of the same concessions, including different work hours, that it received at Bocholt.



A longer workweek also looms for assembly line workers at the Mercedes-Benz plant in Sindelfingen, in Southwestern Germany. There, the company wants to curtail breaks during the workday.



Mercedes has not threatened to abandon Germany. But auto workers shivered recently when Opel, which is owned by General Motors, announced that it would assemble a compact minivan at its plant in Gliwice, Poland, passing over its main factory outside Frankfurt, which had bid for the job.



"The firms are in a good position in these negotiations," said Eugen Spitznagel, a researcher at the Institute of Employment Research in Nuremberg. "The unions recognize that the economic climate is bad."



A small majority of the German public also think that a long workweek may help preserve their jobs, according to a recent survey conducted for the business magazine, WirtschaftsWoche.



Even in Germany's public sector, the work is piling up. The state of Bavaria has extended the workweek to 42 hours from 40. Chancellor Gerhard Schröder wants to extend federal work hours to 40 from 38.5. And Deutsche Bahn, the state railway system, is demanding up to six more hours a week from its engineers and conductors.



Flagging tax receipts and large budget deficits are the main cause of the state's newfound push for hours. In France, however, the government is making a broader case that the 35-hour week, which applies to public- and private-sector jobs, is throttling the country's growth.



"I've never been convinced of the positive effect of a 35-hour week," President Jacques Chirac declared recently. "I feel it's been a brake on economic development and therefore a brake on overall employment."



Mr. Chirac is feeling pressure from his fiery finance minister, Nicolas Sarkozy, who has called for French employees to have the right to work more than 35 hours, if it fattens their paychecks.



Mr. Sarkozy's free-market appeal, though hardly popular with French labor unions, suggests there may be a rebalancing in the basic trade-off Europeans have made between work and leisure.



Since the 1970's, Europeans have been willing to accept somewhat slower growth in wages as a price for fewer work hours and longer vacations. The French have an average of 25 vacation days a year, while the Germans get 30 days. The average in Japan is 18 days and in the United States, 12 days.



For a long time, the price for this was not very high, since Europe had high gains in labor productivity, which contributed to booming exports, briskly growing economies and steady wage growth.



Nearly all of these trends turned negative in the 1990's, as productivity growth rates collapsed, especially in comparison with the United States. For a decade, Europe has been stuck in a period of chronic slow growth.



"We're seeing a change because the trade-off has changed," said Daniel Gros, the director of the Center for European Policy Studies in Brussels. "Europeans are seeing that when times are lean, total incomes don't rise at all. So they are saying, `Perhaps we better work longer hours.' "



Mr. Gros disputes the notion that long hours are a panacea for Europe's enervated economies. He says the productivity of workers tends to decline as the number of hours increases. The answer, he says, is for European companies to invest more in workplace training and technology.



To be sure, Europe's dogged pursuit of free time goes on. Sweden is undertaking a two-year study of the social effects of a 30-hour workweek — proving that Thorstein Veblen and his theories about the leisure class still exert a bigger pull on the European imagination than Adam Smith does.



The German government has denied a recent report that it plans to scrap a public holiday on Oct. 3 that celebrates the reunification of East and West Germany. The other 13 paid holidays also seem safe, since most are religious feasts, and the church here retains considerable political power.



Nor have Europe's longer vacations come under the knife yet. The average number of vacation days in western Germany rose to 30 in the mid-1990's from 28 in 1985 and 20 in 1970, and has remained stable since.



The new Siemens contract, however, is pioneering in another way: it replaces the extra payments for vacations and Christmas with a performance bonus, based on the profits of the portable phone division. The payments, once meant to enhance leisure, are now intended to fuel the work.



Mr. Stahl said he would miss the extra money at Christmas, when he would use it to buy gifts and household goods, like a new TV set. The loss of the vacation money next summer will probably keep his family closer to home, perhaps in the nearby Netherlands, rather than in Croatia.



Moreover, Mr. Stahl, who began as a toolmaker's apprentice as a teenager and is now a worker representative in his factory, is skeptical that the performance bonus will ever translate into good money. Siemens, he says, has not done enough to build its brand name overseas as a maker of portable phones, which has limited its profits.



"Shareholders, unfortunately, care only about profits," he said.



Still, Mr. Stahl said he expected that few of his co-workers would walk away from the new contract. Siemens pays well, and jobs like those in the Bocholt plant are difficult to find in today's Germany, he says.



That attitude is even more pronounced in Eastern Germany, where auto workers refused to rally behind the once powerful metalworkers' union, IG Metall, when it called a strike in June 2003 to try to force about a dozen car factories to shorten the workweek to 35 hours from 38 hours, to bring it into line with Western Germany.



IG Metall was forced to abandon the strike, dealing the union and the entire German labor movement a blow from which it has not recovered. The message from the workers was: We will work more, if the alternative is watching our jobs move across the border to Hungary or Poland.



Mr. Stahl reluctantly accepts that view as well, suggesting that the pressure of economic competition is being felt even in Europe's most comfortable quarters.

[Galmin]

Ahh the Siemens deal.



Siemens says: we're going to downsize! We'll move the factories to one of the cheap countries in the east, because the salaries of the western world are not economically defendable.



The Union says: well, what will it take for you not to move the factories?



Siemens says: cheaper workers.



The deal is the 40 hours a week at the same pay, effectively a decrease of salary.

Quote:

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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

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And it will continue to be this way, because Mr Stahl has roughly 30 days paid vacation (Not including weekends, so about 6 (SIX) weeks off, paid by Siemens, every year.).





A look at Siemens

Year 2000: Grossprofit increased with 81%

Year 2001: Grossprofit decreased with 11%, 6100 people sacked worldwide (the decrease was due to the company Infenion, where Siemens had a 71% share at the time).

Year 2002: Grossprofit increased with 24%

Year 2003: Grossprofit stable.

Year 2004: This year the grossprofit in the first quarter in comparison with the first quarter 2003 has increased with 40%! Before the 40-hour-week has been activated!



Ron, it seems you'd have it that downsizing is a solely European problem. It is not.

[questionnaire]

.... Galmin. 'Downsizing' is an American term and initially an American phenomenon. It's about shedding labour to streamline efficiency. Sacking people and cutting costs, basically. America and Europe have been exporting manufacturing to areas of cheap labour for two decades now. It's an indication of how the laws of the market create huge wealth but lower the quality of life for the majority, and how corporate capitalists have no loyalty to any specific national population.



The problem with Ron's cutting and pasting is that his sources are all low-brow right-wing news agencies that don't go into any depth or offer alternative views.

[Galmin]

Quote:

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For a long time, the price for this was not very high, since Europe had high gains in labor productivity, which contributed to booming exports, briskly growing economies and steady wage growth.

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And now it's different? Do you know who is the world’s number one exporter?



Germany!

Quote:

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German businesses have contributed to making Germany the world’s largest exporter for the first time in 11 years, raising optimism that unpopular wage capping has boosted the competitiveness of German industry.





According to a report in the Financial Times Deutschland, Germany recorded $62 billion (€55.6 billion) in exports in August, over 7 percent more in dollar terms than the United States, the consistent world leader. The report, based on figures from the Organization for Economic Co-operation and Development (OECD) and the International Monetary Fund (IMF), shows that Germany has been ahead of the United States in terms of export levels since April this year

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Germany ~80 Million people, US ~290 Million people.

[RonOnGuitar]

Quote:

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it seems you'd have it that downsizing is a solely European problem. It is not.

---

Not at all, Galmin. In fact, "downsizing" didn't pop out at me in the article as the main or central topic. I noted in my "intro" what I thought was the point here.



Perhaps a summation - via some clips - will serve to illustrate the thematic consistency. (Actually, the article's title is an even more concise summation.)

============

The citation in my "intro" of some remarks that turned out to be prophetic:

"that will not change until people start thinking and realizing they are not moving toward some sort of nirvana. They are still in the dream world of welfare, long vacations, guaranteed high pensions, and cradle-to-grave social security, and which obviates the imperative need to face really serious underlying issues."



From the article itself:

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."



"I've never been convinced of the positive effect of a 35-hour week," President Jacques Chirac declared recently. "I feel it's been a brake on economic development and therefore a brake on overall employment."

==================



Now, any nation could cut a work "week" down to a maximum of 1 hour and leave the other 6 days & 23 hours for fun. It would surely sound like utopia to many at first glance, but it would be an economic disaster.



So the article's overall message is Europe tried something that didn't work and , in a stroke of common sense, is trying to fix it. There's nothing wrong with making such mistakes; it's all just part of learning. The mistake, then the correction.



I assume you are familiar with the Norsk folk song "Oleanna"? It's about Ole Bull and a commune he founded. The song comes to mind at this time.



OLEANNA



(chorus between verses)

Ole, oleanna, ole, oleanna

ole, ole, ole, ole, ole, oleanna



Oh to be in Oleanna,

that's where I'd like to be

Than to be in Norway

and bear the chains of slavery



Little roasted piggies

rush around the city streets

Inquiring so politely

if a slice of ham you'd like to eat



Beer as sweet as muncheners

springs from the ground and flows away

The cows all like to milk themselves

And the hens lay eggs ten times a day



In Oleanna land is free

The wheat and corn just plant themselves

Then grow a good four feet a day

While on your bed you rest yourself

[Galmin]

The solution is not merely to change from 35 to 40 hour week.

Hey, I am all for it.





In Europe, as well as in the USA, the population is getting older, the nativity is going in a downward spiral and the mortality simply refuse to balance that. In the extention of this, we'll see everybody working more hours under a longer period of time. Retirement at a given age is not going to be set in stone. However, with everyone working more and longer the amount of young people unemployed will rise accordingly.



Nevertheless, social security for everyone is the smallest account in the balance and amount to peanuts, on a monetary caclulation, in the big picture.

[Galmin]

Whassamatter? No partisan fodder in my most recent post? ;P

[questionnaire]

What Ron's just given us is a biased report of a biased report from a right-wing free-market German think tank (the equivalent of Britain's 'Adam Smith Institute' or 'Institute of Economic Affairs') followed by a childish little allegorical poem to further insult our intelligence. Incapable of raising his game and offering genuine intellectual discussion, he persists with the same tired tactic time and time again.



It doesn't take a great leap of the intellect to understand that Europe's social market economies will get into trouble in a corporate-dominated globalizing market based on cheap labour and long hours. We will not be able to compete unless we shed jobs, forcing idleness on some and ever-lengthening hours on others. It's even happening in my University - some academics are hanging around the place till 8 or 9 pm to impress the boss and further their careers. Crawlers and creeps! They can do 20-30% more work, which means that the rest of us have to work late to keep up. For those with child-care responsibilities, that means working at weekends.



Eventually we could all become like America, of course - with its burgeoning jobless underclass, high crime rate, overworked and stressed-out workforce, mounting consumer debt, totally commercialized leisure and vast polarity between the haves and the have-nots. Ron doesn't realize this, but by highlighting this logical necessity for a shift in work-culture towards the American sweat-shop model he is underlying just how much corporate America is using the globalizing process to dominate and impose its culture on everyone else. Most people work to live, whereas right-wing Americans live to work and have no idea how to occupy their time apart from shopping or indulging in highly commercialized forms of leisure. Apart from a few metropolitan enclaves, the place is a cultural desert. For many people, life won't be worth living under this regime.



I remember staying in an American hotel not so long ago. The chambermaid came in looking ghostly white and wobbling on her legs. She said she had flu. I suggested she see a doctor and have a week off, but she told me that if she did she would be fired instantly. No unions were allowed by the company, which was called 'Larson's Lodge', If my memory serves me correctly. I made the poor woman a cup of tea and told her to sit down for a while before she continued work. Absolutely disgraceful. I know some people 'swing the lead' and abuse the welfare system, but to swing the pendulum too far the other way is completely barbaric. On my way out I told the manager I would not be using the company again without revealing the reason why.