Capital & Class

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Robert Went Capital & Class 2000 24: 1 DOI: 10.1177/030981680007100101 The online version of this article can be found at: http://cnc.sagepub.com/content/24/2/1

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Making Europe workthe struggle to cut the workweek

by Robert Went

HE LAUNCH OF THE EURO on 1 January 1999 has increased the pressure

for EU-wide wage restraints and further flexibilization of labour markets. In the run-up to the European Union summit in Cologne, Dutch ministers Zalm (finance) and De Vries (social affairs and employment) urged their EU colleagues to Europeanise government intervention aimed at keeping wages down, so that profits will go up and (supposedly) more jobs will be created. The OECD (1999: 17) has also said, in a special report about the EMU, There is no guarantee that EMU will set forces in motion that would automatically lead to a better functioning of Euro area labour markets. The sooner countries implement policies that foster greater labour market flexibility, the more they will be to absorb future shocks. But the fight for Europe is in full swing (Dornbusch, 1997), because in several European countries, most importantly France,1 there are trade unions, social movements and parts of the political left that oppose such policies, and propose a shorter workweek and/or an increase in purchasing power instead. The European Union is facing very high unemployment, and two antagonistic social logics are counterposed to each other (Coutrot, 1997: 40).
that official European employment policies are in a blind alley. The dominant analysis of persistent unemployment in Europe is summarised by Sterdyniak et al.:
According to the liberal discourse, European unemployment is not due to problems of macro-economic management. It is the result essentially of rigidities in the labour market, which handicap European rms in competing on the world market. Wages are supposedly insensitive

The impasse of European employment policies High unemployment levels are undoubtedly Europes biggest social problem. Official unemployment is 18 million, but 30 million is closer to the truth. Although policy makers take great pains to explain how seriously they take the problem, neither the European Commission nor the European Central Bank (ECB) expects a reduction in the coming years, making clear

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to the conjunctural situation, which means that firms are forced to adjust their employment levels rather than their wage levels. Wage scales are supposedly not open enough and unskilled labour is too highly paid: this explains why unemployment rates are higher for less educated and less-skilled workers. Unemployment benets are supposedly too high, which discourages the unemployed from actively seeking work and forms a brake on wage decreases during recessions. Making people redundant is supposedly too difficult, and work schedules not exible enough. It is therefore supposedly necessary to deregulate the labour market, abolish the minimum wage, cut social spending. (quoted in Hoang-Ngoc, 1996: 92-3).

Capital & Class #71 solutions did not work any more, a counter revolution in economic policy took place (Grieve Smith, 1996: 206; Went, 1996: 83101). This has led, since the early eighties, to restrictive macro-economic policies. Since then economic policies have had low ination as their main goal. This obsession with price stability is also codied for the Europe of the Euro in the Maastricht Treaty and the Pact for Stability and Growth. According to official theory lower ination will lead to more economic growth, but even mainstream empirical research shows that this justication cannot be maintained (Barro, 1995; Bruno, 1995; Moosa, 1997; Sorel, 1996; Stanners, 1993; Stanners, 1996). Moreover, upholders of the current orthodoxy, who argue that ination comes with a cost (Moosa, 1997: 652-4), neglect the social and human price of unemployment, such as reduced material output, increasing poverty, social inequality, alcoholism, drug addiction and crime (Kitson, Michie and Sutherland, 1997: 2356; Rifkin, 1996: 178, 208). b. Constrained by globalization ? Every day, it seems, citizens of the EU are told that in these days of globalization European companies are involved in a life and death struggle with competitors in the rest of the world, especially with the United States and Japan. But globalization is often exaggerated (Ruigrok and Van Tulder, 1995; Went, 1997) and even the European Commission minimises the consequences of globalization for the EU (European Commission, 1997a). To begin with, most trade by EU countries is intra-EU trade, and this pattern is stable or even getting stronger. At less than 10 percent, the openness of the EU economy is below that of the US (12 percent). According to the European Commission (1997a: 52-3), the globalization of trade only concerns a very

We will now look briey at the four central elements of this mainstream approach.2 a. Unemployment is not a macro-economic problem? According to the dominant paradigm, unemployment in Europe is not caused by insufficient economic growth, but the result of the fact that growth does not lead to enough jobs. The solution to unemployment should therefore be sought primarily in micro-economic policies to increase the jobs intensity of growth. The problem with this theory is that economic growth since the mid-seventies has been much lower than during the so-called post-Second World War golden years of capitalism, while unemployment has risen explosively during those same years of lower growth. Since the mid-seventies, when the postwar expansive long wave of economic growth ended and a depressive phase began (Mandel, 1995), there has been a drop in the rate of economic growth. The capitalist world entered a generalised recession, and after it turned out that traditional Keynesian

Making Europe Work limited share of the EU economy and trade with low-wage countries is not only very limited but also in balance. The Commission also notes that an increasing share of Foreign Direct Investment (FDI) 59 percent in 1994from member states goes to other EU countries. Displacement of production because of high wage costs is rare, limited largely to textiles, shoes and toys. The EU is almost a closed economy, and neither globalization nor low-wage countries can justify the current European socio-economic agenda. c. Too high wages? The third recurring explanation for the high level of unemployment in the EU is that wages are too high. Not strange because for official economic theory unemployment is always and everywhere a wage phenomenon, to paraphrase Milton Friedman (Husson, 1999, 175). If prots increase, the argument goes, more will be invested and unemployment will decline. Helmut Schmidts famous theoremThe prots of today are the jobs of tomorrow leads to various proposals by free-market liberals (reduce the minimum wage and social benefits) and social democrats (reduce the burden of social premiums on wages) which have the common aim of limiting wage costs (Hoang-Ngoc, 1997: 193). The principal problem with this theory is that the rate of return on capital and the share of capital income in the EU have increased sharply since the early eighties, while during the same years unemployment increased instead of decreasing. One explanation for this blatant contradiction is that for individual employers wage costs are an expense, while for all companies together wages are responsible for most demand. Wagecutting is therefore not a solution to unemployment because it reduces

3 purchasing power at the same rate as it reduces costs (Grieve Smith, 1996: 11).3 During the post-war golden years there existed temporarily a more or less stable relation between increases in production, labour productivity and wages, which meant that steadily growing production could be bought by wage-earners. But this Fordist coherence has disappeared in the years since the generalised recession of the mid-seventies (Hoang Ngoc, 1996; Husson, 1996). Since the early eighties the share of capital income in national income has gradually risen, and according to the European Commission (1997a: 29) prots as a share of national income are back to the level they were at in the early seventies. Because employers only invest when they expect higher sales and sufficient prots, higher prots as a result of wage restraint do not automatically lead to more investments and employment, and the opposite may even be the case. If the Dutch policy to restrain wage increases were to be followed by other countries in the EU, Europe would nd itself in crisis, because demand would fall even more. d. Rigid labour markets? Very popular among policy makers and international organisations is the theory that unemployment in the EU is high because labour markets are too rigid and not exible enough. The idea behind this theory is that the labour market is a market like any other, in which equilibriumin this case full employment will be reached as soon as those who demand and those who supply labour behave rationally and adapt their prices sufficiently. From this approach follows the policy prescription that the exibility of the labour market has to be increased, for example by reducing or even abolishing the minimum wage, Iowering unemployed benets and making

4 redundancies easier (see for example Siebert, 1997). Again, there is even mainstream research that questions this theory. Much to the chagrin of the editor of The Wall Street Journal (6/7/1999) the OECD for example joined the doubters in its latest Employment Outlook: Labor economists at the Organization for Economic Cooperation and Development partly reversed the findings of their landmark study of ve years ago that linked high unemployment and labor laws. Some might say that, for reasons known only to themselves, they reversed the laws of economics as well. Earlier Nickell concluded after inquiry to what extent frequently mentioned rigidities such as too generous benets, strong trade unions and lack of education can explain European unemployment:
It is clear that the broad-brush analysis that says that European unemployment is high because European labor markets are rigid is too vague and probably misleading. Many labor markets institutions that conventionally come under the heading of rigidities have no observable impact on unemployment (Nickel, 1997: 73).

Capital & Class #71 the fact that its labour market is more exible. But Eatwell (1997) shows that this lower gure for people who are officially jobless is a consequence of the faster increase in the number of (often badly paid and insecure) jobs with low productivity. Following Joan Robinson (selling match boxes in the Strand, cutting brushwood in the jungles, digging potatoes on allotments), he characterises such employment as disguised unemployment (see also Mishell and Schmidt, 1995). For the Netherlands Delsen and De Jong (1997) calculate that 60 percent of recently created new jobs are marginal jobs. As they point out, this fact has important social and economic consequences, because these jobs are very sensitive to conjunctural developments, lead to poverty and dependence, result in lower investment in education and training, and affect the social infrastructure.4 In short, it is no accident that European employment policies are in a blind alley. The rationale for the dominant approach is highly questionable, and the present policy agenda is first and foremost an expression of a changed relationship of forces between labour and capital to the benefit of the latter. Fundamentally, capital is not really interested in solving unemployment (Coutrot, 1997: 47-50). In 1968 Business Week wrote: You have to keep unemployment high enough so that workers don't get too greedy (quoted in Pollin and Zahrt, 1997: 49). Recently, the parliamentary spokesperson on finance for the Dutch social-democratic party (PvdA) Van der Ploeg (1997: 27) wrote to the same effect when he tried to convince the FNV, the main trade union federation in the Netherlands, that it should drop the goal of reaching full employment: Only when unemployment is high enough can it have a preventive

And after comparing the effect of institutional factors on employment in the US with those in Germany, England, France and Italy, Buchele and Christiansen (1998: 134) also conclude that such factors cannot explain the general rise of unemployment, and that further research should pursue the suggestion of several analysts that the overall upward trend in unemployment rates is related to a global decline in the growth of aggregate demand throughout the advanced industrialised economies. In comparing the US and the EU, the US lower unemployment gure is often credited to

Making Europe Work effect as punishment for those who are picking their nose during work time. An alternative logic for full employment To be able to successfully attack Europes most important social problem it will be necessary to put full employment back at the top of the political agenda.5 Chances for such a Europe-wide change of priorities have increased, because as the neo-liberal explanations for unemployment become less and less credible, the political space and support for alternatives is growing. In several European countriesincluding France, Italy, Spain, Germany and Belgium there are trade unions, social movements and parts of the political left that want to ght for a shorter workweek.6 A real ght against unemployment means a break with the current economic orthodoxy and with the neo-liberal market ideology. The obvious mechanism to reduce unemployment drastically is a collective shortening of the workweek without loss of pay and with compensatory hiring, enforced by (European) law. Such a reduction of the workweek makes sense because it is better and more social if one hundred percent of the population works ninety percent of the time than the other way around. It should be collective and enforced by law, because only then will all companies participate, even the smaller ones, so that the effects on employment are maximised. It should also be without loss of pay , because since the early eighties prots have risen spectacularly in the EU as the gains from the yearly rise of productivity have been unilaterally appropriated by capital (Coutrot, 1997; Husson, 1996). Husson (1999: 115) calculates for the four biggest countries in Europe that 92 per cent of increased productivity went to wages in the years 1965-1981, but only 48 percent in

5 1981-1997. In most countries, the gradual reduction of the workweek stopped at the beginning of the eighties. A shorter workweek should involve compensatory hiring, nally, to avoid its leading only to an increased workload and more stress and flexibilization instead of additional jobs. The extent to which these conditions can be met is not beforehand given but dependent on the relationship of forces between capital and labour, that is on the power of workers, unions, and selforganisations and movements of unemployed. There are in principle many advantages to shortening the workweek in this way. 1.) It potentially creates many new jobs, even in cases where it is not possible to enforce complete compensatory hiring. Depending on how many hours the workweek is reduced and on the level of compensatory hiring, research institutes in France estimated that the number of newly created jobs could even go up to 2,450,000 (Chanteau and Clerc, 1997: 31). 2.) When everybodys workweek is reduced, new jobs are created at all levels. As a result more people can work at the level they are trained for, so that there is less downward pressure on most notably the least-educated and -trained, who are now often the rst victims of unemployment. 3.) A collective shortening of the workweek goes against the current sex-segregation of the labour market, due to which women especially work (and earn) part time, very often involuntarily. 4.) An important argument often used (e.g. in France, Denmark, and Germany) to support a reduction of the workweek is that less work will improve the quality of life and health, with more free time.7

6 5.) A shortening of the workweek changes the relationship of forces between capital and labour: with a tighter labour market unions can make more demands. 6.) When every person who would like to work gets a job and this new employment is paid for out of capitals greatly increased share in the national income, social differences will decrease. For all these reasons it is no wonder that (international) policy-makers, employers and mainstream economists strongly oppose a reduction of the workweek: cuts in the working week are always the result of a fundamentally conictive process. It is important to realise that the effectiveness of a reduction of the work week would be increased by European coordination, because that would mean that countries reinforce rather than undermine each others efforts, and real differences among countries would not be increased. Contrary to current practice, the EU would therefore have to initiate and co-ordinate cross-border employment policies.8 The French social-democratic candidate Jospin pledged during his election campaign in 1997 to create 700,000 new jobs by reducing the work week by 10 percent without loss of pay. Most of his social democratic colleagues in the rest of Europe commented that he would not be able to do this, because of the consequences such a measure would have for the competitive position of French companies. The alternative response to this problem is that not only France but all EU states should reduce the workweek at the same time by 10 percent without loss of pay then their relative positions would not change, and progressive social policies could less easily be frustrated by capital ight or investors strikes. The ght against unemployment, which cannot be won on a

Capital & Class #71 national level, therefore also means a struggle for a different Europe. In most trade unions such a reorientation will require hard ghts. From 1960 to 1980 many trade unions in Europe launched struggles for a reduction of the working week, as a means to share the benets of productivity increases. But in the 1980s and 1990s capital went more on the offensive and the downward convergence of working time across Western Europe was broken by the antilabour offensive of each national bourgeoisie (Dupont, 1998: 24). Todays European Trade Union Confederation (ETUC) strategy is characterised by [a] an approach to employment in which the reduction of the working week has only a general place; [b] the centrality, not of any general demand, but of a method: negotiation; and [c] acceptance of flexibilization on condition that it is negotiated (Pernot, 1998: 90). Especially since the introduction of the Euro, the only real alternative is building a strong Euro pean dimension into demands; mobilisations of labour and social movements for a social Europe; and a process of levelling up of national norms. Moreover, without such common mobilisations and demands, advances in each country will be partial and permanently threatened. This has been understood very well by the pan-European Euromarch campaign against unemployment, job insecurity and social exclusion (see Mathers, 1999: 15-20). A European-wide campaign for a reduction of the working week can be an important element of a strategy to improve living and working conditions, cut unemployment, and reduce the unequal distribution of wealth. But of course it is far from an answer to all social and economic problems. First, a shortening of the work week can not be seen in isolation, butas

Making Europe Work for example the Euromarches have pointed outhas to be part of a broader strategy, including the extension and rebuilding of the public sector to be able to guarantee basic rights for all, and a guaranteed minimum income for everybody.9 And second, there exists under the current conditions the danger that reductions of the workweek will be used by governments to force unemployed into precarious jobs, and by employers to increase exibilization. This last thing is increasingly the case in France, and also in Italy, where Rifondazione (Refounded Communists) spectacularly forced the Prodi government to accept a reduction of the workweek in Notes
1. See for example Appel des economistes pour sortir de la pensee unique, 1997; Aznar et al, 1997; Chanteau and Clerc,1997; Coutrot,1997; Gaspard,1997; Guedj en Vindt,1997; Hoang Ngoc,1996 and 1997; Husson,1993 and 1996; Rigaudiat,1993; Salesse,1997. 2. According to another popular theory (see for example Rifkin, 1996 and Dunkerley, 1996), the present high level of unemployment is the result of a rise in productivity which is caused by the increasing use of computers, information technology and robots. The problem with this thesis is that the rise of productivity in the eighties and nineties is much lower than in the fifties and sixties, when full employment was more or less maintained (Sengenberger,1996; Went,1996) 3. Kalecki (1977: 26) noticed this as early as 1935: Now, one of the main features of the capitalist system is the fact that what is to the advantage of a single entrepreneur does not necessarily benefit all entrepreneurs as a class. if one entrepreneur reduces wages he is able ceteris paribus to expand production; but once all entrepreneurs do the same thingthe result will be entirely different. 4. Eatwell (1997: 93) points to another price that society and future generations pay for the big

7 2001. The union federations have reacted negatively to this agreement, and the few examples of a reduction of the workweek since then involve terrible concessions by the workforce in terms of flexibility (Rigacci, 1998, 28). However, such a negative outcome is not a fatality, but a question of building movements towards a dynamic of social change. As Vercammen (1998) notes: The bourgeoisie has always resented the lazinessof the common folk. For them, our free time is a lost opportunity to exploit our labour power. For 150 years the length of the working week has been dened through class struggle. This is still true today.

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increase in marginal, low-productivity jobs: An increase in disguised unemployment is clearly a waste of resources, since labour is working at a level of productivity below its true potential. Moreover, high levels of disguised unemployment when associated with very low wages may discourage productivity-boosting innovation in other sectors, so slowing down the overall rate of productivity growth. 5. See also the memoranda published by the network of European Economists for an Alternative Economic Policy: Full Employment, Social Cohesion and Equity for Europe: Alternatives to Competitive Austerity (May, 1997), and Full Employment, Solidarity and Sustainability in Europe: Old Challenges, New Opportunities for Economic Policy' (December 1998). 6. See: Dossier on the 35 hour week in Europe, International Viewpoint no. 297; La reduction du temps de travail en Europe, numero special, Chronique Internationale de lIRES (September 1998); La reduction du temps de travail, Futuribles analyse et perspective , no. 237 (December 1998); Working time policy in Europe, Transfer: European Review of Labour and Research, vol.4/4 (Winter 1998).

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7. For Ernest Mandel the struggle for a shorter workweek was always of decisive importance in a strategy for a really self-managed socialist society without exploitation, oppression and bureaucracy: (N)o real qualitative progress can be made toward self government unless people have the time to administer the affairs of their workplace or neighbourhood. As long as the average man or women spends ten hours a day at work or between home and worknot counting womens second workday at homethey have neither the time nor the psychological inclination to spend another four hours attending meetings or performing administrative labour. Self administration and self management will then to a large extent remain formal and ctitious. irrespective of any bad intentions of political parties, politicians or entrenched bureaucrats (Mandel, 1992: 202). 8. In 1993, after pathetic procrastination and hesitation, the European Commission nally produced a directive, fixing the maximum working week at 48 hours, dened as a weekly average over four months. This directive imposes 11 hours daily rest (the minimum time between the end of one shift and the

Capital & Class #71

beginning of the next) and a break of at least 24 hours every week. Paid holiday is xed at a minimum of four weeks. In other words, the EU is xing worse minimum conditions than exist in every member state except Britain, which refused to approve the directive In December 1996, the European Court of Justice rejected Britains protest against the directive on maximum labour time. The application of the clauses on the maximum 48-hours week and four weeks paid annual holiday, represents signicant progress for many British workers (Dupont, 1998: 25-6). 9. A group of intellectuals, among others Gorz, Negri and Lipietz, published an open letter in Le Monde in 1996 calling for common sense, humanity and equity. Concretely, they proposed a reduction of the workweek, a third sector of the economy which is not based on prot but on social and ecological priorities, and an unconditional guaranteed income for all. This statement seems to have had quite an impact in Italy after it was published in Il Manifesto (27/10/1996). Thankswithout implicating him in any sense in the open letter or this articleto Massimo De Angelis, who kindly provided this information.

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Vercammen, F. (1998) Our reform of the labour market, in International Viewpoint, no.297: 26. Went, R (1996) Crenzen aan de globalisering?, Amsterdam, Het Spinhuis. __________ (1997) Globalization: myths, reality, and ideology, in International Journal of Political Economy, vol.26 no.3: 39-59.

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