France’s reduction in the standard working week increased measured productivity but did not expand employment at firms, according to an October study that separates the effects of shorter hours from accompanying payroll-tax cuts.
The NBER working paper, by Pauline Carry, Claire Montialoux, Elio Nimier-David, Alexandra Roulet and Nina Roussille, revisits the move from 39 to 35 hours with monthly pay preserved. It has not been peer-reviewed.
The authors estimate a 6% reduction in firms’ total hours, a 1% fall in value added and a 2% productivity gain after accounting for changes in workforce skills. Their decomposition estimates employment would have fallen 3.8% without tax relief.
The reform’s deadlines differed by firm size, falling in 2000 for larger employers and 2002 for smaller ones. The researchers use that timing and differences in exposure to hours and tax changes to estimate their separate effects.
Productivity and output answer different questions
Labour productivity measures output relative to labour used, commonly the amount produced per hour. Total factor productivity instead estimates how efficiently a business combines inputs, including labour and capital equipment.
Neither measure is the same as total production. A company can become more efficient per hour while producing less across a shorter working week.
Value added is the output remaining after subtracting purchased goods and services used in production. It differs from revenue, which includes the full selling price of what the company supplies.
These measures matter when employers assess working-time changes. An improved hourly result cannot, on its own, establish whether customers received the same service, whether total sales held up or whether the business needed more staff.
Keeping monthly pay constant while reducing hours also raises the wage cost of each scheduled hour before other adjustments. The firm’s response may involve prices, margins, staffing, overtime or changes to how work is organised.
The tax package belongs in the calculation
A payroll-tax reduction lowers an employer’s cost of employing someone. It can offset part of a rise in hourly pay, making the combined policy different from a stand-alone cut in hours.
For a government, tax relief has a fiscal cost. For an employer, it affects the amount actually paid to provide a job. Assessing a working-time reform requires keeping both budgets in view.
France’s official working-time guidance continues to identify 35 hours as the general legal weekly duration for full-time work. Hours beyond the legal duration are treated as overtime, subject to the applicable arrangements. It is not a universal ceiling on time worked.
A shorter standard week should not be confused with a compressed schedule. Moving the same total hours into fewer days changes when employees work. Reducing total hours changes how much time is available.
Work organisation and employee experience remain part of the result
The study’s survey evidence points to reorganisation and more intensive work as possible productivity mechanisms. The historical, nationwide reform is not a direct test of today’s voluntary four-day-week schemes.
The International Labour Organization’s review of working time treats hours and schedules as separate influences on work-life balance. It reports that working longer than desired is associated with poorer reported balance and argues for wider access to reduced and flexible hours.
Our reporting on remote work and the distance between homes and jobs examines another aspect of workplace flexibility. A change in attendance, a change in hours and a change in job responsibilities need not produce the same outcome.
For an employer considering shorter hours, the figures to monitor extend beyond output per hour. Total production, staffing costs, service availability, errors and employees’ experience can move in different directions.
