Friday, June 1, 2007

effect of removing 35 hour working week restriction

"I am going to sit my labour markets exam soon but have comeacross a question which i am having diffculty with:

Asses the likely impact of reomivng the 35- hour working time restriction on wage and unemplyment levels in france and germany."

For thi answer i did think about agruements such as reducing motivation therefore may leave the work force. May be forced to work longer hours Could increase
accdients and also could increase wages helping people out of relative poverty i think these are wrong please help. Many thanks!"

Yes, you would be wrong, because you have to consider effects on unemployment levels in Fr, and germany. If you talk, in general, about effects of removing restriction you will get zero. (I remember marking this paper, and I think many people did badly)

Some ideas for the effect of removing 35 hour working week on unemployment:

1. People will work longer hours. Therefore, there is firms can produce the same with less workers - therefore unemployment
  • However, people may not want to work longer hours, or companies may not ask workers to work more. Even if people work longer, would firms really want to employ less workers?

2. Removing restrictions may help firms be profitable and encourage them to invest in these countries. This investment may lead to more jobs created.

3. May have little impact because people ignore regulations already (e.g. work on black market)

4. If people work longer hours they may have more income which they spend, this creates employment opportunities.

5. Unemployment in Fr and Germany already high. This is caused by structural unemployment and labour market rigidities. Freeing labour markets may help in long run because of increased competitiveness. (similar to no.2)

6. .

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