French lower house approves overtime reform

[JURIST] The French National Assembly [official website] Thursday approved an overtime reform measure championed by President Nicolas Sarkozy [official profile; BBC profile], which if enacted as law, would make overtime pay tax-free and reduce payroll fees for employers. The measure, which supporters say will encourage growth with additional work, would weaken the absolute 35-hour workweek adopted in 2000 under the socialist government of French Prime Minister Lionel Jospin [BBC profile]. Critics of the 35-hour workweek say it has failed to increase employment and has stunted economic growth, but critics of the overtime reform proposal say it will reduce employment while decreasing government revenues. Sarkozy's government has estimated that the overtime reform will reduce revenues by €6 billion euros, but has said that the projected economic growth would help compensate for the lost taxes.

The overtime measure is part of a larger economic reform package, and the National Assembly, the lower house of the bicameral parliament, is expected to pass the full economic reform package this week. The package, which also includes proposals that would lower inheritance taxes and set a cap on total tax payments from 60 percent of income to 50 percent, will likely be referred to the Senate [official website] early next week. AP has more. The Financial Times has additional coverage.

 

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