Sarkozy's tax-free overtime reform begins
1 October 2007, PARIS (AFP) - A key economic reform introduced by President Nicolas Sarkozy to stimulate growth kicked in on Monday in France, as rules came into force removing tax and social charges from overtime hours.
1 October 2007
PARIS (AFP) - A key economic reform introduced by President Nicolas Sarkozy to stimulate growth kicked in on Monday in France, as rules came into force removing tax and social charges from overtime hours.
After featuring high on the president's election manifesto in May, the measure was part of a Law on Work, Employment and Spending Power voted through parliament at the start of August.
The reform is intended to encourage staff to work longer hours, and companies to make more work available. From Monday all hours worked beyond the statutory 35 hours in the week will be free of charges for both employer and employee.
The annual cost to the treasury will be about six billion euros (8.5 billion dollars).
Business leaders who welcomed the change when it was announced have since expressed scepticism over its impact on employment, especially in light of the deteriorating economic climate in France.
A series of unwelcome statistics have darkened the skies in recent days.
Growth in the second quarter of 2007 was just 0.3 percent -- well below forecasts; public debt is at a near record high of 66.6 percent of GDP; and household confidence fell by six points in September.
Company bosses quoted by Les Echos newspaper said the main beneficiaries of the reform will be employees of small firms already working more than 35 hours a week, who will instantly see an increase in their pay packets.
However they said that the difference would be much less obvious to employers.
Subject: French news