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Europe Still Agrees On One Thing: August Off


Letter From Rome

EUROPE STILL AGREES ON ONE THING: AUGUST OFF

Dear Folks, It's just no fun being a journalist in Europe during the summer. I had wanted to write about the spiffy new Punto subcompact that Italian auto giant Fiat will be rolling out next month, but nobody answers the phone at company headquarters in Turin. Then I thought, surely BUSINESS WEEK readers will want to know about how the Sicilian Mafia finally seems to be on the run? Alas, every prosecutor I try to call in Palermo is at the beach. Hey, I've got it! I'll do a Letter From Rome--and describe how no one, but no one over here works in August. "Now that's not a bad idea," says Antonella, my Italian wife, who has been on holiday since July. "And while you're at it, fetch me another Diet Coke."

I certainly wouldn't have to scrounge too hard for anecdotes. When Europe's monetary system buckled in early August, central bankers and government officials meeting in Brussels were in a poisonous mood. One reason: Many were yanked from their holidays to deal with the crisis. And when General Motors Corp. stepped up its charges of industrial espionage against Volkswagen, its late-July timing was exquisite. The German auto giant was in the middle of a three-week summer shutdown. Ferdinand Pi ch, VW's embattled chief executive, could barely contain his rage about having to return from a far-flung beach.

NO PICNIC. Nat rlich, Europe in this August of 1993 isn't the cheeriest of places. That perhaps explains the determination to get those four, five, even six weeks of holiday, no matter what. The month that began with the worst monetary crisis in decades is looking worse. Each week rings in new and record unemployment rates. From Copenhagen to Athens to Madrid, the worst recession in two decades is cutting deeply into the good life of the Europeans. And the unease isn't just economic: A cruel war is raging in the very heart of the Continent. Shell-shocked Sarajevo is barely 250 miles from Italy's packed Adriatic Sea beach resorts.

Just now, almost anywhere with sand, surf, and sun is wildly overcrowded, overpolluted, and overpriced. After all, almost 80 million Europeans are on August vacation. Big French groups such as Aerospatiale and defense concern Matra shut down for one full month. Computer giant Olivetti closed its doors for the month of July, while Fiat grinds to a halt in August. In Germany, a silence settles over the land during the Sommer Loch, or summer hole, when government, banking, and industry wind down.

Here in Rome, it's just another typical, empty August. No matter that Italy is undergoing unprecedented political and economic housecleaning. Almost half the Eternal City's population of 3.5 million has fled, turning the ancient streets and monuments over to bands of sweaty tourists. Finding a sandwich or a swimsuit can be tough: Fully 70% of Rome's 60,000 shops and restaurants are closed. Some diehard Romans actually savor their city this way. One such is my neighbor, violinist Massimo Paris. "Personally, I love Rome in summer, without people, smog, or traffic," he says. "But God help you if you need a doctor in a hurry."

Blame this late-summer languor on the French, perhaps. It was in 1936 that the left-wing, populist government of the day instituted Europe's first paid summer vacations. After World War II, most other European governments followed suit. Nowadays, all workers in Italy get four weeks of vacation, minimum--plus the automatic tredicesima bonus. Equivalent to a 13th month's salary, it's shelled out in December to help people buy Christmas presents.

IDLE HANDS. No wonder Europe is having a hard time competing with the rest of the world. Europeans are just starting to realize that working less and producing less might have something to do with the Old World's fall from economic grace. According to the Organization for Economic Cooperation & Development, a typical Japanese worker put in more than 2,000 hours on the job last year; an American, a little under 1,800. But a French worker clocks in at just about 1,650 hours, while his Norwegian counterpart, at 1,400 hours, barely seems to roll out of bed in the morning. Maybe those statistics are in some way connected to the sad news that about 20 million Europeans now are more or less permanently on vacation. "You have to go all the way back to the 1930s to find unemployment this bad," says Peter Dixon, senior economist at DRI/McGraw-Hill in London.

That's why there's a growing movement to roll back some of the more uncompetitive features of the European welfare state. From removing bans on Sunday trading in France to ending wage indexation in Italy, governments on the Continent are desperately searching for ways to spur economic growth and increase job creation. But so far, no one from Naples, Italy, to Narvik, Norway, is actually suggesting that vacation time be slashed. That would be heresy indeed.

Perhaps modern-day Europeans should ponder the fate of the ancient Romans, who knew a thing or two about uniting Europe. Toward the end of the Roman Empire, about one day in three was a holiday. O.K., there were a few other factors, like widespread dumping of cheaper Parthian goods, that finally did in the decadent toga-wearers. But there must be a parallel somewhere to what's happening today. That will be something to think about as Antonella and I head for the beach. Ciao for now.

Regards,JOHN ROSSANT


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