Companies Should Set Own Hours

Sometimes, the way to the future leads through the past. Germany is slowly realizing that the country can gain nothing from nothing. In the face of economic stagnation, the world's leisure-time champions are beginning to accept one of life's unpleasant truths: that growth is based on work and a commitment to work is one of the most important requirements for strong growth. This is reflected by the doggedness and intensity with which the debate over extending work hours has been waged for nearly two years - and now the first conclusions are being reached. The absurd idea suggested by Finance Minister Hans Eichel earlier this month to celebrate the German Day of Unity on a Sunday each year in order to boost the government's revenues does not help one iota. The growth caused by an additional work day and the higher tax revenues produced as a result are built on such an unsteady foundation that any conscientious finance minister would not dream of basing his budget on them.

The debate took a big step forward last year when employers in eastern Germany surprisingly were able to fend off the push by the large IG Metall union to introduce the 35-hour workweek and rob the region of one of its main competitive advantages - the longer hours allowed by collective-bargaining agreements. That prompted the western part of the country to mull over the economically foolish idea of fixing the 35-hour workweek in collective-bargaining agreements. A major portion of Germany's unemployment can be traced to the concept of reducing work hours while keeping wages the same. But it takes a very long time before the recognition of a mistake actually leads to a correction - at least in Germany.

One thing needs to be kept in mind: Since surveys have shown that the majority of employees are willing to work longer hours, even with no extra pay, the country's unions have shown their willingness to accept spectacular compromises. But the concessions made on reintroducing the 40-hour workweek are restricted. The unions do not want to have anything to do with a sweeping reintroduction of the 40-hour workweek. And vacation days - 29 on average each year - remain sacred. The thought of counting some of the many holidays as vacation time is also a taboo issue.

But that may not be the case much longer. The debate could indeed come to a halt halfway before it is completed if the economic pressure that is fueling these changes eases. But anyone who wants to put Germany back on a high-growth course has to bring the debate on work hours to a successful conclusion. And this conclusion is: putting the issue of work hours back in the hands of employers.

Companies must have the freedom to base their work hours on their competitive situation. The government can set upper limits and periods for rest. But the companies themselves should control the work schedules created within these parameters. An across-the-board return to the 40-hour or even the 42-hour workweek is not necessary. All that is needed is a legal exemption in the collective-bargaining agreement that allows companies to introduce longer - or shorter - hours. As a result, companies could react quickly to the market. This is the real issue. After all, longer work hours are not an end in themselves. The concept only makes sense if the results of this extra labor have a chance in the marketplace or when it leads to lower costs because employers work longer hours for the same pay, expensive overtime hours are eliminated and machines can be used in a better way.

Anyone who pushes for the possibility of creating longer work hours will have to live with the unions' charge that they are “job killers.“ This thinking is based on the deep-seated notion that somewhere there is a limited amount of work that has to be divvied up as evenly as possible in order to keep everybody happy. Nothing is farther from the truth. The real factor that determines how many jobs are created is the costs of labor. If that cost is too high, the work will be handed to machines or transferred abroad.

The chance of longer hours without (full) compensation cuts the costs of work in Germany. That makes the country's jobs and products more competitive and forms the foundation for growth and more jobs.