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In this issue of European Employment Review, we highlight an important Bill introduced by the French government that will allow workers to keep more of the money they earn from working overtime.
France controversially introduced a statutory 35-hour normal working week in 2000. The new centre-right president, Nicolas Sarkozy, believes that this has led to a lack of disposable income for workers and an insufficient number of hours being worked in the economy.
His government has thus introduced legislation to allow employees to increase their purchasing power by working beyond 35 hours a week, with employers receiving compensation for the additional cost of this overtime in the form of cuts in social security contributions. The government also hopes that the new measures will encourage employers to increase the supply of work. Longer working hours will, the argument goes, lead to more economic growth and more wealth. Trade unions, however, are not convinced.
Under the Bill, from 1 October this year earnings from overtime work – essentially all working time above 35 hours a week – will not be subject to income tax. Further, employers and employees will pay a reduced rate of social security contributions on these earnings.
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