The European Dream (9 page)

Funding basic research has always been the key to advancing productivity. America understands this and has long invested in pure research. Recently, however, European scientists have begun to outpace their American peers in a number of scientific fields. For example, Europe is forging ahead of the United States in particle physics research and is currently building the world’s most powerful atom smasher. While it might come as a surprise to most Americans, Europe surpassed the United States in the mid-1990s as the largest producer of scientific literature.
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European businesses have been particularly competitive at the cutting edge of the software and communications technology revolutions. Europe went out in front on wireless technology and continues to enjoy a comfortable lead over the U.S. in adoption and market penetration. Industry analysts predict that the increasing integration of wireless technology will help bolster European productivity in the coming decade, keeping the continent competitive with the U.S.

European companies are also jumping ahead of their American counterparts in the next great technology revolution, grid computing, raising the prospect of the kind of qualitative leap in productivity that could leave America behind by the end of the decade.

Grids hook up individual computers, combining their unused power to tackle very complex computing tasks. Scientists envision a not too distant future where millions of computers are connected in multiple regional, national, and global computational grids to create a “universal source of computing power.”
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The grid, says grid specialists Ian Foster and Carl Kesselman, “is an emerging infrastructure that will fundamentally change the way we think about—and use—computing.”
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Researchers in the new field ask us to imagine what the desktop computer will look like “when the power of a supercomputer with capabilities six orders of magnitude greater is just a mouse click away.”
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When the Swiss pharmaceutical company Novartis needed a new supercomputer for designing drugs, instead of buying one at an enormous cost, the company used software created by United Devices, an American company, to link its 2,700 desktop personal computers together, giving it the same computing power as a single supercomputer. The company has already found a number of new chemical compounds with the aid of its computational grid and is now planning to expand its grid capacity by linking all of its seventy thousand personal computers together, giving it incredible computing power.
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According to European scientists and industry observers, Europe is eighteen months ahead of the United States in the introduction of grid technology, and the European Union has announced the launch of two state-of-the-art initiatives in 2004. The first is called Enabling Grids for E-science in Europe and will be the largest international grid infrastructure in the world. The grid will operate in seventy institutions across Europe and will have the computing capability of twenty thousand of today’s most powerful personal computers. The second project, coordinated by France’s National Center for Scientific Research, will connect seven supercomputers in Europe at optical network speeds. Mário Campolargo, director for the research infrastructure unit at the European Commission, says that “the goal is to establish Europe as one of the most dynamic and creative environments in the world to deploy grid-enabled infrastructures.”
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The European Union is determined to lead the way in the grid technology revolution, realizing that the potential productivity gains of being first in the field could be enormous and unprecedented for European business. The EU already has in place a five- to ten-year strategic plan and is projected to spend upwards of $428 million between 2002 and 2006 to upgrade the grid infrastructure.
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Europe’s ability to establish unified standards of operation, coordinate activity among competitors, and create public-private partnerships generally gives it a leg up on American companies, where a “go it alone” strategy often results in competing standards, haphazard development of new technologies, and market redundancies. Certainly this has been the case with the wireless technology revolution and now with the new grid technology.

European business is banking on the prospect that increased outlays for pure research and collaborative public-private partnerships to advance new technologies, when combined with the benefits of increasingly seamless internal market operations, will be the winning combination to boost productivity gains to new levels and keep the EU competitive with the U.S.

Even though Europe’s productivity is between 92 and 97 percent of the U.S. level (depending on how the figures are adjusted), per capita income in the EU is just 72 percent of American per capita income. How do we explain the divergence? Some of the difference has to do with the lower employment participation rates in Europe—lower employment in relation to the total population—differences in retirement ages, and unemployment rates. But 75 percent of the difference is attributable to the fewer hours worked in the EU.
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It turns out that in France, and virtually every other country in the European Union, workers have opted for more leisure rather than longer work hours and bigger paychecks. The French government instituted a thirty-five-hour workweek in 1999.

The French experiment is particularly interesting because it defies the American logic that hard work and long hours on the job are indispensable to achieving significant gains in productivity and a better quality of life for working people. As already mentioned, French productivity in 2002 was higher than in the U.S., and French workers were enjoying far more leisure time.

The French went to the thirty-five-hour workweek, in part, to create more jobs. If people worked fewer hours, went the reasoning, additional people could be employed, thus reducing the nation’s unemployment roles. To make sure there would be no loss in pay, the law mandates the thirty-five-hour workweek at the old thirty-nine-hour pay scale. The government, in turn, is obliged to subsidize the companies by lowering employers’ social security contributions so there will be no net loss of revenues to the employers in making the shift to a thirty-five-hour workweek schedule.
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In addition, the government provides an incentive to companies to create new jobs by agreeing to subsidize the social payments (retirement, health care, workers’ compensation, and unemployment insurance) of any newly hired low-wage workers.
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The annual cost of subsidizing French companies is about $10.6 billion.
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Much of the funds have come from so-called sin taxes on tobacco and alcohol. The government expects to make up the remainder of the payout by the addition of new workers onto the employment rolls. More people working means fewer people on government assistance. The new workers bring home paychecks, spend money in the marketplace, and pay taxes, all of which accrues to the overall well-being of the French economy. More than 285,000 jobs have been directly created by the thirty-five-hour workweek plan since its inception.
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Skeptical at first, most French employers have been won over to the scheme. They’re finding that fresh and motivated workers can produce just as much output in seven hours a day as less motivated and more tired workers can in eight hours. And, there has been an ancillary benefit: the thirty-five-hour-workweek law allows employers greater flexibility in assigning work schedules. They can now establish weekend, evening, and holiday shifts, and require employees to spread out their vacation time to accommodate production schedules.
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The thirty-five-hour law also built in other accommodations to both management and labor. For example, the thirty-five-hour week may be measured not only by hours worked per week but also by hours per month and days per year. Senior management in companies may be exempted from the working hour restrictions. Overtime, under the new law, must exceed regular pay by at least 10 percent. Moreover, an employee may not work more than 180 extra hours per year in the absence of a collective bargaining agreement. Overtime that exceeds 180 hours requires a 20 percent pay increase.
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In a survey of corporate directors conducted in 2001, 60 percent of the respondents polled said that the new law helped improve productivity by introducing more flexible work arrangements and by creating a new dialogue with workers, which improved morale.
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More leisure time has also boosted consumer spending at French cafés, movie houses, sporting events, and other entertainments. Surveys show that, for the most part, the French public is enthusiastic about the shorter workweek. Workers often start their weekends on Thursday and don’t go back to work until Tuesday. Working moms have the option of staying home on Wednesday, when most French schools are closed.
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While the worldwide jobless recovery of the past two years has dampened France’s employment prospects, as it has those of the United States and every other country in the world, had France not introduced the shorter workweek, there is no doubt that its unemployment rate would be even higher than it is now.

In a number of other European countries, the average workweek is already thirty-nine hours or less, and most are edging toward the thirty-five-hour French workweek. Meanwhile, the average vacation time across Europe is six weeks, and in most countries, vacations are mandated by federal law.
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In the U.S., employers are not obligated by law to provide any vacation time. Two weeks’ vacation, however, has become a standard in most industries.

French workers are on the job about 1,562 hours per year, according to the most recent OECD figures (2000). In contrast, U.S. workers put in 1,877 hours per year, the most of any of the major industrialized countries. The average American worker is now working ten weeks more a year than the average German worker, and four and a half more weeks a year than the average British worker.
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Even in Japan, which is known for its long, grueling workdays, workers clock in for 1,840 hours of work per year, thirty-seven hours fewer than in the United States.
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Europe is far ahead not only in advancing shorter workweeks but also in creating innovative approaches to human resource management to allow workers greater flexibility in juggling work and lifestyles. Belgium, for example, has introduced novel legislation called “time credits,” which went into effect in January 2002. The law is designed to create a more flexible balance between one’s work life and home life, and updates an older law called “career breaks.”
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Under the new “time credits” law, workers can take a maximum of one year off over their entire career or interrupt their work, or reduce it to a half-time job without severing their employment contract and without loss of social security rights. To receive a general career break, the employee has to give a three-month advance notice to the employer but does not have to give any reason for the request. The time credit can be extended up to five years by an agreement with the company. Employees who have worked less than five years receive a monthly government allowance of €379. The allowances rise to €505 for workers who have been employed longer.
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Workers can also request “thematic leaves” to take care of an ailing family member, to provide medical assistance to a relative, or to take care of a child. Each of these specific career breaks comes with different allowances and allocated times. Each worker can also choose to reduce his or her working hours by 20 percent, which generally works out to be a four-day workweek. Workers over the age of fifty can reduce their work hours by one-fifth to one-half over an unlimited period of time.
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American employers would be incredulous at the thought of providing career breaks and time credits and wonder how Belgium’s companies could maintain their competitive edge with these kinds of flexible labor schedules. Still, it’s interesting to note once again that, like France, the Belgian workforce enjoyed higher productivity in terms of output per hour than the American workforce in 2002.
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Europeans like to say that “Americans live to work” while “Europeans work to live.” What’s the point of making more money, they argue, when you have no leisure time to enjoy it? According to one study, 37 percent of Americans now work more than fifty hours a week, and 80 percent of male workers work more than forty hours a week. And the hours worked by many Americans keep going up while in Europe hours worked keep going down. No wonder 70 percent of American parents complain they lack sufficient time with their children, while 38 percent of Americans say “they always feel rushed,” and 61 percent say they rarely have excess time.
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With so little time available after work, Americans use many of their spare moments just to run errands, pay bills, and fix up the house.

The increase in work hours takes a heavy toll on American health, according to health professionals. Stress-related diseases—heart attacks, strokes, and cancer—are on the rise in America. One recent study by the journal
Psychosomatic Medicine
found that the more often American workers skip their vacations, the higher their health risks are. Men who took an annual vacation were 32 percent less likely to die of coronary artery disease than those who did not take vacations.
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The difference in how Europeans and Americans conceive a good economy is reflected in the hours worked on both sides of the Atlantic. If one measures the standard of living in terms of paychecks, Americans are 29 percent wealthier than their European counterparts.
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But if one measures the good life by the amount of leisure time available, the average European enjoys four to ten weeks more of play each year.
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The question, then, is, Does that 29 percent of additional wealth buy more joy and happiness—enough at least to justify giving up upwards of two to three months of additional leisure each year? As my wife is fond of reminding me—because I, too, am an American workaholic—“No one has ever regretted on their deathbed that they didn’t spend more time at the office.”